Archive for the 'ModernPolitics' Category

The Scamming Beggar

I have a long standing rule to NEVER EVER give money to bums. No matter what the circumstances. I even look down on people who do. They rub me as purely emotional acts with not even one second of real thought. I do this for two reasons: one experience, the other logical. Growing up in Compton, I was approached by what we called cluck-heads daily. Crack addicts who would do anything, and I mean anything, for a $1. They would give you the most extravagant reason why that dollar was absolutely necessary. Then, after a moment of weakness, you would see them smoking that dollar – digging themselves further into the crack addiction. After years and years of this, I have developed quite a thick skin from beggars.

The logical reason has to do with the fact that it is very difficult to separate the true needy beggar from the scammer.  When confronted for a donation, with such limited information, there really is no statistically significant way to know if the bum is going to use the donation for something useful, or simply another hit of drugs. Much more beneficial is to save the donation and send it to a charity devoted to helping the truly needy. They have the means of separating the sincere bum ready to change their life, from the one who just wants another hit. With such noisy information, it’s much more logical to withhold your money and choose an efficient charity of your choice.

With that said, I was touched by the news article showing a New York Police officer giving a pair of winter boots to a shoeless bum. I thought, maybe in that situation that is the best thing to do, as the bum currently needs shoes, else his feet will freeze. It’s an immediate, obvious need that should be fulfilled. Sending money to a charity is not going to cut it, as by then the bum could have lost his feet to frost bite. Anyway, I didn’t think much more of it until later when I saw the story on CNN.

While reading the article, still torn between feelings of admiration and disapproval, I came across this interesting section:

There were some who considered the officer a victim, taken in by another scam.

“This guy is only barefoot as a begging strategy,” wrote David Levy. “I’ve been seeing him around midtown for years. I’ve even witnessed someone buy him slippers in a freezing day which he promptly put in his shopping cart.”

“Clever stunt! The (man) is ‘parked’ at the entrance of a shoe shop. He got like 10 pairs that day,” commented Louis Zehmke.

Which cured my short lapse of judgement.

Quote Of The Day

If I ran the zoo, that’d be my main idea. We’d start out with things like congestion fees and carbon taxes that serve non-revenue policy goals but do raise money. Then we’d add on some land taxes and VATs and such to fun public services. Once that’s squared away, you can do redistribution with a progressive payroll tax, a small wealth tax, whatever.

But standard practice among Democrats has become to argue that we should expand public services and pay for them by taxing the rich. This feeds into a poisonous dynamic that’s bringing the country low. On the one hand, it means that Democrats are insuffiently attentive to the question of cost-effectiveness. The pitch to taxpayers isn’t “this is a cost-effective use of your money to provide valuable public services” it’s “wouldn’t this be nice, and besides you won’t have to pay.” Then on the other hand, you unleash a toxic dynamic whereby rich people’s desire to not have their wealth redistributed gets channeled into a ferocious ideology of claiming that no public services are worth financing. So rather than having two separate debates—one about the provision of public health, educational, and transportation services and the other about redistribution—we have one big combined debate. The result is that we underspend on public services, and then tend to spend the dollars that we do spend ineffectively.” – Matthew Yglesias

Quote Of The Day

“On the historical evidence, practically the only time the federal government runs a surplus is when one party holds Congress and the other the White House. While it is probably true that Obama is, as one commenter put it, not a Kenyan but a Swede, that his ideal is to make the U.S. into something more like a European welfare state, he is also a Chicago politician, unlikely to let his principles get in the way of his politics. Faced with a congress controlled by the other party, a substantial minority of it in favor of a sharp reduction in government expenditure and regulation, he might well decide that his best strategy is to outflank the Republicans on the right. He has already made a few gestures in that direction, in rhetoric if not yet in substance.” — David Friedman, answering “Who is the Least Bad Candidate?”

Quote Of The Day

“Conservatives will also find that Europe is much less open to immigration than the United States, that Europe generally has much lighter taxation of investment income, that few European countries uphold American-style strong separation of church and state, that European countries generally afford accused criminals fewer procedural rights, and that Europe has much less in the way of product liability and class action lawsuits. What’s more, though there are a few exceptions (Sweden comes to mind), Europe as a whole is more conservative in its gender norms in many ways. Women’s workforce participation rates are lower, fewer children are born to single parents, and there are many more legal restrictions on abortion. ” – Matthew Yglesias, on the important difference between Europe that conservatives would find surprising

John Cochrane Blog

University Of Chicago economics professor, and Paul Krugman nemisis, John Cochrane is now blogging. For those interested, add his blog to your blogroll.

Why Ron Paul Annoys Liberals/Progressives

Glenn Greenwald nails it:

The parallel reality — the undeniable fact — is that all of these listed heinous views and actions from Barack Obama have been vehemently opposed and condemned by Ron Paul: and among the major GOP candidates, only by Ron Paul. For that reason, Paul’s candidacy forces progressives to face the hideous positions and actions of their candidate, of the person they want to empower for another four years. If Paul were not in the race or were not receiving attention, none of these issues would receive any attention because all the other major GOP candidates either agree with Obama on these matters or hold even worse views.

Progressives would feel much better about themselves, their Party and their candidate if they only had to oppose, say, Rick Perry or Michele Bachmann. That’s because the standard GOP candidate agrees with Obama on many of these issues and is even worse on these others, so progressives can feel good about themselves for supporting Obama: his right-wing opponent is a warmonger, a servant to Wall Street, a neocon, a devotee of harsh and racist criminal justice policies, etc. etc. Paul scrambles the comfortable ideological and partisan categories and forces progressives to confront and account for the policies they are working to protect. His nomination would mean that it is the Republican candidate — not the Democrat — who would be the anti-war, pro-due-process, pro-transparency, anti-Fed, anti-Wall-Street-bailout, anti-Drug-War advocate (which is why some neocons are expressly arguing they’d vote for Obama over Paul). Is it really hard to see why Democrats hate his candidacy and anyone who touts its benefits?

Full post can be found here.

Quote Of The Day

“Even among recipients of bachelor’s degrees, 90 percent manage to graduate with less than $40,000 of debt. What happened to the other 10 percent is no particular mystery: they are less likely to come from wealthy families, but they attended pricier schools and paid for more years of tuition (see chart below). Compared with other graduates, these students are 20 percentage points more likely to have attended schools costing $20,000 or more a year (including room and board), and 20 percentage points less likely to have attended a public institution. Ten percent attended a private for-profit institution, compared with only 1 percent of their lesser-borrowing peers. High-borrowing students also took significantly longer to finish their degrees.” – Judith Scott-Clayton, assistant professor at Teachers College, Columbia University writing in the New York Times Economix blog

Megan McArdle On Fiscal Stimulus

McArdle makes a decent case to be cautious about fiscal stimulus here:

Starts to pick up at the 3 min mark.

Quote Of The Day

“As I pointed out just yesterday, many Democrats not only passively acquiesce to Obama’s continuation of core Bush/Cheney Terrorism policies, but enthusiastically cheer it as proof that they, too, can be Tough and Strong (manly virtues demonstrated by how many human beings their leader kills from afar). So here you have Think Progress heaping praise on Obama for seizing what is literally the most radical power a President can seize: the power to target — in total secrecy and with no checks or due process — their fellow citizens for execution: specifically, assassination-by-CIA.” — Glenn Greenwald

Why This Recovery Is Different

The best explanation of why this economic recovery is both taking so long and especially affecting those at the lower end of the economic spectrum was given by economist Bryan Caplan who I quote in full here:

Nominal wages rarely fall – even when there’s high unemployment. Part of the reason is regulation, of course. But even under laissez-faire, employers have to cope with human psychology. Almost all workers think that nominal wages cuts are unfair. And while employers might be tempted to say, “Fairness be damned,” they have to face the fact that hurting worker morale hurts productivity and profits. (See here for lots of supporting evidence). [Broken link fixed.]

So how can the market get back to equilibrium? The simplest solution is to freeze nominal wages and wait for inflation to bring the real wage back to realistic levels. A more proactive solution, though, is to cut benefits, and hope workers don’t mind.

Cutting benefits sounds crafty. But on reflection, it might be even worse than cutting wages. Consider: Most workers’ main benefit is health insurance. If employers curtailed this benefit, would workers find it unfair? I don’t know of any survey research on this point, but I’ll bet that most workers would react viscerally to cuts in health insurance. Higher co-payments? Unfair! Tighter coverage? Unfair! Cheaper plan? Unfair, unfair, unfair!

It gets worse. Unlike wages, health insurance costs go up automatically – at a rate well above inflation. So even in the midst of severe unemployment, total nominal labor costs keep rising – unless employers choose to risk severe morale problems.

In past recessions, this was probably a small effect. Back in 1980, health care was only 9.2% of GDP. By 2009, this percentage had nearly doubled to 17.6%. To get a feel for the numbers, consider George Mason. My total Kaiser premium is $1448 per month. If this rises 5% per year, labor costs soar $2700 in just three years. Relative to an econ professors’ salary, that’s not much. But for lower-paid workers, it’s huge. Even if there were a “total pay freeze,” a worker who cost $30k in 2008 would cost 9% more in 2011.

My speculation: The high and rising cost of health insurance, combined with health insurance fairness norms, is a major reason why employment is recovering so slowly. If I’m right, we’ve got a serious problem with no easy solution. As always, though, we should start with the low-hanging fruit: Don’t mandate coverage, don’t punish firms for trying to control costs, and above all, don’t amplify workers’ dysfunctional beliefs about fairness with demagoguery. Sigh.

For The Record: On The Economy

For the record, I agree with every single point David Frum makes here against Republicans in general:

On the most urgent economic issue of the day – recovery from the Great Recession – the Republican consensus is seriously wrong.

It is wrong in its call for monetary tightening.

It is wrong to demand immediate debt reduction rather than wait until after the economy recovers.

It is wrong to deny that “we have a revenue problem.”

It is wrong in worrying too much about (non-existent) inflation and disregarding the (very real) threat of a second slump into recession and deflation.

It is wrong to blame government regulation and (as yet unimposed) tax increases for the severity of the recession.

It is wrong to oppose job-creating infrastructure programs.

It is wrong to hesitate to provide unemployment insurance, food stamps, and other forms of income maintenance to the unemployed.

It is wrong to fetishize the exchange value of the dollar against other currencies.

It is wrong to believe that cuts in marginal tax rates will suffice to generate job growth in today’s circumstance.

It is wrong to blame minor and marginal government policies like the Community Reinvestment Act for the financial crisis while ignoring the much more important role of government inaction to police overall levels of leverage within the financial system.

It is wrong to dismiss the Euro crisis as something remote from American concerns.

It is wrong to resist US cooperation with European authorities in organizing a work-out of the debt problems of the Eurozone countries.

It is wrong above all in its dangerous combination of apocalyptic pessimism about the long-term future of the country with aloof indifference to unemployment.

With that said, I also agree with every single point he makes here.

Ricky Perry For President?

I gotta be honest, I haven’t been following the presidential candidates for 2012 as closely as I’d like, but I also gotta say, this took balls on Rick Perry’s part and for that, he is my current favorite candidate for 2012:

[youtube:http://www.youtube.com/watch?v=RDZNWc50-eY]

[youtube:http://www.youtube.com/watch?v=la2yvb063yY]

Quote Of The Day

“Warren Buffett has persuaded 68 other billionaires to follow his example and promise to give at least half their wealth to charities. But why hasn’t Buffett proposed also that the very rich make large gifts to the federal government to offset what he considers ridiculously low taxes on their incomes and wealth? My guess is that he and the others who pledged to give away their wealth to charity would have little confidence in how the government would spend such gifts. Buffett, for example, is giving most of his wealth to the Gates Foundation, not to the federal government, and is relying on how this foundation will spend his vast gift. Given this reluctance to make large gifts to the federal government, why should anyone have confidence that the federal government will spend additional tax revenue in a sensible way?” — Gary Becker

The Progressive Magazine On Ha-Joon Chang’s Book

I got back from a five day trip to Chicago yesterday, and as such, was able to catch up on a lot of my magazine reading. A review that caught my attention was Amitabh Pal, of The Progressive Magazine, review of Ha-Joon Chang’s recent book 23 Things They Don’t Tell You About Capitalism. For those unfamiliar with Ha-Joon Chang, he is a heterodox economist who is a prominent supporter of industrial policy – a view largely shunned by mainstream economists.

Amitabh Pal gives a list of the positives and negatives of the book (some I agree with, some I don’t) but the part of the review that most caught my attention was this part:

Chang’s Achilles heel is his fixation with industrial policy, which he views as the road to salvation for poorer nations. Only if countries protect their infant industries, nurture them in various ways, and allow them to mature can they ascend to prosperity, he says.

But a number of nations have tried this with little success, the biggest example being India, where family-run conglomerates used protectionist policies to instead foist the most shoddy, substandard products on hapless Indian consumers (the dominant car model until the late 1980s was based on a 1950s British Morris Oxford).

The obvious difference between India and Chang’s native  South Korea was that big business in India held sway over the state, rather than the other way around in South Korea, as delineated in Vivek Chibber’s Locked In Place: State-Building and Late Industrialization in India. Chang sidesteps such issues.

What I find most interesting is that  Amitabh Pal’s rebuttal is nearly identical to the standard economic criticism of industrial policy: namely, if a countries government is independent enough to properly implement industrial policy, the country likely doesn’t need it, and if the government is too corrupt, industrial policy only makes things worse.

I find it interesting that one of the most prominent proponents of industrial policy, in arguing for industrial policy, completely avoids dealing with a central criticism head on. But I admit, I have personally not read the book – so maybe Amitabh Pal completely missed it?

I cannot seem to find the online version of the review, but it was listed in the printed edition of April’s publication.

Quote Of The Day

“I’ve written numerous times over the last year about rapidly worsening perceptions of the U.S. in the Muslim world, including a Pew poll from April finding that Egyptians view the U.S. more unfavorably now than they did during the Bush presidency.  A new poll released today of six Arab nations — Egypt, Lebanon, Jordan, Saudi Arabia, the United Arab Emirates and Morocco — contains even worse news on this front” — Glenn Greenwald

Quote Of The Day

“BTW, progressives like Yglesias often point out that no matter what they say, the GOP is devoted single-mindedly to one goal, and one goal only—lower tax rates for the rich.  And I have to agree that that is an obsession of many GOP economists.  But then why the strange pattern of state income taxes around the country?  Income taxes are often higher in conservative Republican states in the South, than in liberal Massachusetts.  Even more surprisingly, the rich in the South are especially likely to be Republicans (as compared to the rich in Boston, NY and LA.)  Yes, there are some GOP states with no income tax (Texas, Tennessee and South Dakota.)  But there are also swing states (Nevada, New Hampshire and Florida) and even one liberal state (Washington.)  Why don’t the southern and Rocky Mountain GOP states at least cut the top rate down to Massachusetts levels (5.3%)?” –Scott Sumner, Economist