Monthly Archive for May, 2009

More On The Problems With The Stimulus

Economist Arnold Kling reports:

Greg Mankiw reports that the yield curve is steep, meaning that long-term interest rates have risen. In my view, this is perfectly rational, and it shows that the short-run effect of the fiscal stimulus is negative, as Jeff Sachs predicted.

This is all based on a Keynesian type of macro analysis. As we know, most of the stimulus spending does not take place until next year and beyond, so the short-run gains are puny. On the other hand, the big increase in the projected deficit creates the expectation of higher interest rates, which raises interest rates now. These higher interest rates serve to weaken the economy.

According to this standard analysis, the stimulus is going to hurt GDP now, when we could use the most help. Much of the spending will kick in a year or more from now, with multiplier effects following afterward, when the economy will need little, if any, stimulus.

This is the flaw with using spending rather than tax cuts as a stimulus. The lags are longer when you use spending.

The full post can be found here.

Defending Sonia Sotomayor

Future Supreme Court justice Sonia Sotomayor is getting alot of criticism for this comment she made at the Cultural Diversity Lecture at the UC Berkeley School of Law:

“I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion [as a judge] than a white male who hasn’t lived that life.”

For example, Stuart Taylor writes, “unless Sotomayor believes that Latina women also make better judges than Latino men, and also better than African-American men and women, her basic proposition seems to be that white males (with some exceptions, she noted) are inferior to all other groups in the qualities that make for a good jurist.”

An obvious explanation and one that seems to fit well with Sotomayor’s overall speech at Berkeley, yet one that I have not seen presented in other blogs, is that “a wise Latina woman with the richness of her experiences” is in a better position to understand the difficulties faced by a minority in a way that a white man cannot. One of the primary roles (reiterated by, if memory serves me correctly, John Roberts during his confirmation process) of the Supreme court is to defend the rights of the minority (used in general terms here) from being trampled by the majority. All Sotomayor is saying, it seems to me, is that being a particular minority should help one appreciate that responsibility better than say, not being a minority.

Seen in this light her statement sounds innocuous and certainly not racist, as some have implied.

My Thoughts On Sonia Sotomayor

Though obviously not my first choice, given that Obama won the presidency, Democrats control both houses of congress with large majorities, and the fact that Sotomayor is replacing an already liberal justice, I think she is far more than those of us on the right could have asked for. The WSJ is even reporting that while she is liberal, she also shows a moderate streak on many issues and on issues like abortion, she could surprise us all. In other words, at worst we have a Supreme Court exactly like it was before with the opportunity for it to move slightly to the right.

Overall nothing worth fighting against. The most Republicans should do is bring her controversial views to light for all to see but confirm her anyway.

But then again, given that her name is my sisters middle name, I’m probably biased. 🙂

Update: The New York Times has more.

The Cultural Argument Against Gay Marriage

Of all the arguments against gay marriage, the religious liberties argument, the reductio absurdum argument, the better safe than sorry argument, and others, the one people have the most difficulty understanding, atleast from my experience in discussing it, is the cultural argument against gay marriage, yet it is one of the ones I find most persuasive. So here I try to give a better explanation of what I see as the cultural argument against gay marriage.

It starts with the assumption that laws shape peoples cultural mores and beliefs. It does not have to be consciously, many times it is subconsciously. Abortion is more acceptable, for example, because it is legal. Making it legal, to alot of people, gives it a stamp of approval, a cultural acceptance. The cultural argument states that if gay marriage is legalized, because gay unions are inherently unable to produce children, it will send a cultural signal that marriage and children are not tied together.

This is how Maggie Gallagher explains it:

The argument is that extending marriage to include same-sex couples would not just give rights to a small subset of the population, but would radically transform what marriage is. So long as only opposite-sex couples can marry, the thinking goes, marriage is linked to procreation; if same-sex couples can marry, too, then marriage is transformed into something else entirely. Adding same-sex marriage would ruin the old institution and create a new one, and the new institution would not longer retain a focus on having and raising children. Viewed in that light, same sex marriage is a threat to society: by redefining the institution, it will kill off its most important feature…

Sex makes babies. Society needs babies. Babies need fathers as well as mothers. That’s the heart of marriage as a universal human institution.

Please note: Procreation is not the definition of marriage. It is the reason for marriage’s existence as a public (and yes legal) institution. People who don’t have children can still really be married (just as people who aren’t married can and do have babies).

But if sex between men and women did not make babies, then marriage would not be a universal human institution, or a legal status in America.

In other words, people raised in a society where gay marriage is legal will view marriage differently than people raised in a society where gay marriage is banned. The former will see the link between marriage and procreation weak at best, whereas the latter will see a stronger connection between procreation and marriage (Btw, preliminary data suggests this is already happening, see here).

This is especially troubling when you consider what this cultural change would do to areas where marriage is already in a precarious position.  Poor inner city neighborhoods, for example, will see a weakening of their already weak cultural mores regarding marriage and if there is one thing they need less of, it is that.

This is what Heather Mac Donald writing at the SecularRight blog referred to, though few understood her connection,  when she blogged this:

The biggest social problem in the U.S. today is the crime and academic achievement gap between blacks and whites…One overpowering cause of black social failure is the breakdown of marriage in the black community. Nationally, the black illegitimacy rate is 71%; in some inner city areas, it is closer to 90%. When boys grow up without any expectation that they will have to marry the mother of their children, they fail to learn the most basic lesson of personal responsibility. A community without the marriage norm is teetering on the edge of civilizational collapse, if it has not already fallen into the abyss. Fatherless black boys, who themselves experience no pressure to become marriageable mates as they grow up, end up joining gangs, dropping out of school, and embracing a “street” lifestyle in the absence of any male authority in the home.

If the black illegitimacy rate were not nearly three times the rate of whites’, I would have few qualms about gay marriage. Or if someone can guarantee that widespread gay marriage would not further erode the expectation among blacks that marriage is the proper context for raising children, I would also not worry. But no one can make that guarantee.

In other words, gay marriage is a social experiment with an institution that has been around in every culture at almost every time period for as long as recorded history can go back, where the costs of the social experiment are borne mostly by those at the bottom of the economic ladder. This helps explain why so many of the black community, especially the inner city black community(and minority community in general), is adamantly opposed to gay marriage – gay marriage primarily hurts them!

I grant that this argument is not powerful enough to ban gay marriage – it’s ultimately a cost/benefit analysis. There may very well be scenarios where gay marriage, seen as a right issue, may outweigh the costs of further marriage breakdown in the inner cities of the United States. My point here is not to give the complete argument against gay marriage, only to show that there are trade-offs involved. Very real and important ones.

Quote Of The Day

” When you make lending to high-risk people less attractive, the result is not worse terms for low-risk people who have been profitable all along.  The result is that high-risk people get less credit.  They used to be able to get credit despite their credit-unworthiness by paying extra; if the law forbids this, why lend to them?” — Bryan Caplan, professor of economics on the Real Unintended Consequences of New Credit Card Regulations

Lil Hispanic Pundit

Me and my now five month old baby boy:

Lil Hispanic Pundit

Picture was taken in front of the Birch Aquarium in La Jolla, California.

More pictures here.

The Invisible Hand vs Charity

One of the major problems I have with Chicano Studies is its overemphasis on altruistic ventures as opposed to “personal gain”. Becoming a community organizer, for example, is more encouraged than becoming an engineer. This was particularly important to me last year when my sister, being in her junior year of high school, was applying to colleges. Though she had already decided on engineering as her intended major, she was having doubts and was considering a profession that “makes a difference”.

I explained to her that engineering can also be used to make a difference, the two are not mutually exclusive. I also said that when you compare engineering to the highly inefficient means of “making a difference” common among chicano studies students, like community organization, one can make a very strong argument that engineering makes more of a difference – and in the process, you can make a good living doing it.  She didn’t seem convinced and I could tell that I needed to explain my point better. Unable to do so at the time I resorted to reminding her that there is a field in engineering that may allow her to design better prosthesis, and being that my dad lost his leg from the knee down in a work accident, she could possibly make his life and people like him better.

That satisfied her but I still thought I needed a better way to explain my point. The blog post I did later on the topic, titled “In Praise Of Personal Interest” did a better job, I wrote:

…if charity is your goal, with extra money [you would make by being an engineer] you can provide valuable resources, fund efficient charities, be a stronger role model to the next generation (three people in my family want to be engineers now, just because of my experience), provide a better future for your children, assist your family out, or, just as importantly, be a testament to those around you that hard work and dedication pay off, that there is a way out of the ghetto.

Lastly, unlike nonprofits, even if altruism is not your goal, capitalism works in such a way that when pursuing personal interest “you are led, as if by an invisible hand, to do things that improve the lives of others”.

Still though, I felt like I could have explained myself better. My point does not come across as clearly as I’d like it to. Well to my surprise, while riding my bicycle to work yesterday, I was listening to a bloggingheads podcast with Philosopher Peter Singer and economist Tyler Cowen about alleviating poverty when Cowen asks Peter Singer a question that I would have asked him if I was doing the podcast, namely: what advice would you give to an 18 year old in college who has read Peter Singers book, is convinced that making a difference matters, and is considering a career as an engineer in the cell phone industry because she sees what a difference cell phones are making to the poor in Africa? Would that career choice, from an altruistic perspective, make more of a difference than, say, a person who makes 40k/year and gives 15% to the poor in India? What if the engineer never gives a dime to charity?

What answer do you think Peter Singer gave? Click below to see the exchange (full video, which is highly recommended, can be found here). It is a good answer, and in the end, it moves me a step closer to finally explaining my point better.  Maybe I should forward this to my sister?

Quote Of The Day

Today’s decision by the S&P rating agency to place the United Kingdom government’s AAA rating on negative watch should be a wake up call to the Obama administration about the dangers of fiscal profligacy. So too should the Chinese government’s repeated comments about its reluctance to keep adding to its already extraordinarily large U.S. Treasury holdings, as well as the Âľ percentage point back-up in long-dated U.S. Treasury yields over the past 2 months.” — Desmond Lachman, bogging at the AEI blog

Quote Of The Day

“Many people think Cheney is scare-mongering and owes President Obama his support or at least his silence. But there is a different problem with Cheney’s criticisms: his premise that the Obama administration has reversed Bush-era policies is largely wrong. The truth is closer to the opposite: The new administration has copied most of the Bush program, has expanded some of it, and has narrowed only a bit. Almost all of the Obama changes have been at the level of packaging, argumentation, symbol, and rhetoric. This does not mean that the Obama changes are unimportant. Packaging, argumentation, symbol, and rhetoric, it turns out, are vitally important to the legitimacy of terrorism policies.” — Jack Goldsmith, former Bush administration lawyer writing in the New Republic…Glenn Greenwald, writing in Salon, agrees and has more to say here.

When Doing Nothing Is Better

The New York Times art section ran an article on differing views of the great depression: its causes and the affects public policy had on it.

Richard Vedder, an economist at Ohio University, made this interesting observation:

Mr. Vedder playfully offered another analogy: the recession of 1920. Why was that slump, over and done with by 1922, so much shorter than the following decade’s? Well, for starters, he said, President Woodrow Wilson suffered an incapacitating stroke at the end of 1919, while his successor, Warren G. Harding, universally considered one of the worst presidents in American history, preferred drinking, playing poker and golf, and womanizing, to governing. “So nothing happened,” Mr. Vedder said.

Of course Mr. Vedder does not wish ill health — or obliviousness — on any chief executive. Still, in his view, when you’re talking about government intervention in the economy, doing nothing is about the best you can hope for from any president.

The full article can be found here.

Update: David Friedman has more here.

Quote Of The Day

“Any cost savings you want to wring out of Medicare can be wrung out of Medicare right now:  the program is large and powerful enough, and costly enough, that they are worth doing without adding a single new person to the mix.  Conversely, if there is some political or institutional barrier which is preventing you from controlling Medicare cost inflation, than that barrier probably is not going away merely because the program covers more people.  Indeed, to the extent that seniors themselves are the people blocking change (as they often are), adding more users makes it harder, not easier, to get things done.” —Megan McArdle

Quote Of The Day

“The Obama administration’s behavior in the Chrysler bankruptcy is a profound challenge to the rule of law. Secured creditors — entitled to first priority payment under the “absolute priority rule” — have been browbeaten by an American president into accepting only 30 cents on the dollar of their claims. Meanwhile, the United Auto Workers union, holding junior creditor claims, will get about 50 cents on the dollar….By stepping over the bright line between the rule of law and the arbitrary behavior of men, President Obama may have created a thousand new failing businesses. That is, businesses that might have received financing before but that now will not, since lenders face the potential of future government confiscation. In other words, Mr. Obama may have helped save the jobs of thousands of union workers whose dues, in part, engineered his election. But what about the untold number of job losses in the future caused by trampling the sanctity of contracts today?” — Todd J. Zywicki, professor of law at George Mason University and the author of a book on consumer bankruptcy and consumer lending, forthcoming from Yale University Press

Quote Of The Day

“To me, Pelosi’s denial (and accusation against the CIA) lays bare a deeper truth about the Democrats. Without Obama they’d be nearly as big a mess as the Republicans. Most of them are complicit in the Bush torture program and the wars. The party is almost headless without Obama – led by the fickle and hardly inspiring Reid/Pelosi duo. After Obama, if conservatives learn anything over the next eight years – yes, I’m predicting it will be eight – unless the Democrats get some sort of order and discipline and more importantly, some grander vision, then I think the GOP should have no trouble at all coming in and cleaning up.” — E.D. Kain

DC Voucher Rally

[youtube:http://www.youtube.com/watch?v=V34kYMm82oo]

Reason explains what this rally was about:

On May 6, 2009, concerned parents, students, and others gathered in Washington, D.C.’s Freedom Plaza. They came to voice support for the D.C. Opportunity Scholarship Program, a school-voucher program authorized by Congress in 2004 (as the seat of the federal government, the District is overseen by Congress). The program gives 1,700 students up to $7,500 to attend whatever school their parents choose.

The program is wildly popular with parents and children—there are four applicants for every available slot—and a recent Department of Education study found that participants do significantly better than their public school peers.

Yet working with congressional Democrats and despite President Barack Obama’s pledge to put politics and ideology aside in education, the Obama administration effectively killed the program through a backdoor legislative move. “[Education] Secretary [Arne] Duncan will use only one test in what ideas to support with your precious tax dollars,” says the president. “It’s not whether it’s liberal or conservative, but whether it works.”

Shortly after last week’s rally, President Obama said that he would allow students currently enrolled in the program to finish up through high school, but that no new students would be allowed to enter the program. Thus, a president who exercises school choice himself, has consigned thousands of low-income students to attend massively underperforming D.C. public schools.

For more on the voucher program, watch “President Barack Obama & the DC School Voucher Program.”

Quote Of The Day

“The Detroit Free Press should come with a warning label. In today’s edition I was jolted by the shocking discovery that suburban public schools compete with each other for students. Apparently when parents are able to choose schools, the schools are aware of this and respond by seeking to get their business. All because – are you ready for this? – public schools want to maximize their budgets!” — Greg Forster

Gay Marriage And Religious Liberties

National Public Radio reports:

As states have legalized same-sex partnerships, the rights of gay couples have consistently trumped the rights of religious groups. Marc Stern, general counsel for the American Jewish Congress, says that does not mean that a pastor can be sued for preaching against same-sex marriage. But, he says, that may be just about the only religious activity that will be protected.

“What if a church offers marriage counseling? Will they be able to say ‘No, we’re not going to help gay couples get along because it violates our religious principles to do so? What about summer camps? Will they be able to insist that gay couples not serve as staff because they’re a bad example?” Stern asks.

Stern says if the early cases are any guide, the outlook is grim for religious groups.

A few cases: Yeshiva University was ordered to allow same-sex couples in its married dormitory. A Christian school has been sued for expelling two allegedly lesbian students. Catholic Charities abandoned its adoption service in Massachusetts after it was told to place children with same-sex couples. The same happened with a private company operating in California.

A psychologist in Mississippi who refused to counsel a lesbian couple lost her case, and legal experts believe that a doctor who refused to provide IVF services to a lesbian woman is about to lose his pending case before the California Supreme Court.

More stories at the link above. This is precisely what Mary Ann Glendon, Professor of Law At Harvard University, referred to when she wrote:

Religious freedom, too, is at stake. As much as one may wish to live and let live, the experience in other countries reveals that once these arrangements become law, there will be no live-and-let-live policy for those who differ. Gay-marriage proponents use the language of openness, tolerance and diversity, yet one foreseeable effect of their success will be to usher in an era of intolerance and discrimination the likes of which we have rarely seen before. Every person and every religion that disagrees will be labeled as bigoted and openly discriminated against. The ax will fall most heavily on religious persons and groups that don’t go along. Religious institutions will be hit with lawsuits if they refuse to compromise their principles.

The NPR article can be found here. My thoughts on this can be found in a 2005 post here.