Krugman on the Past

Paul Krugman refers to the period from about the 1940s to the 1970s as "Middle class America," and says: "It was a society without extremes of wealth or poverty, a society of broadly shared prosperity, ... ." Seriously, is this a joke? First of all, I don't think the millions of blacks in the South thought so highly of this period. It's certainly possible that Krugman is thinking only of how the white people in his neighborhood lived, but that's not representative of society as a whole. Second, more generally, how can he possibly say there were no extremes of wealth or poverty? He's using the statistics for the top 10% of income earners. But I'd like to see how the top 1%, 5% and bottom 1% and 5% fared. Given the dominance of manufacturing industry at this time, I have a hard time believing that the concentration of wealth and power was less than it is today.

More from Howard Gardner

Out of concern with inequality, he says:

"The accumulation and cross-generational transmission of wealth in the United States has gone way too far. When a young hedge-fund manager can take home a sum reminiscent of the gross national product of a small country, something is askew. When a self-made entrepreneur can accumulate enough money to, in effect, purchase that country, something is totally out of whack. It’s impossible to deny that market fundamentalism has gone too far.

There are two modest and generous ways to change this situation. First, no single person should be allowed annually to take home more than 100 times as much money as the average worker in a society earns in a year. If the average worker makes $40,000, the top compensated individual may keep $4 million a year. Any income in excess of that amount must be contributed to a charity or returned to the government, either as a general gift, or targeted to a specific line item (ranging from the Department of Veterans Affairs to the National Endowment for the Arts).

Second, no individual should be allowed to accumulate an estate more than 50 times the allowed annual income. Thus, no person would be permitted to pass on to his or her beneficiaries more than $200 million. Anything in excess must be contributed to charity or donated to the government."

There are so many criticisms to be made here that I'm not sure where to start. I'll just focus on one. If we did this, I wonder how many days it would take for rich people to get their money (and themselves) out of the country? I'd say around .5 days at most.

A Harvard Professor Demonstrates His Brilliance

Howard Gardner says:

“The right wing isn’t just taking over the country, it’s shanghaiing all our values. If there’s a Republican administration after the next election, I would join in efforts for some sort of secession. It’s not the same country anymore.”

Democracy can be a real pain when you're in the minority, but this seems a bit extreme.

Shh, It's Cold

Why is it that when temperatures are colder than usual, the media never mentions how this relates to global warming:

Temperatures on the Atlantic coast have been on average two or three degrees Celsius below seasonal averages, said Jean-Marc Le Gallic from Meteo France.

No mention of global warming, though, just a description of how people are depressed as a result.

Now, if it was warmer than usual, no doubt this would be more evidence of global warming. But since it's colder, global warming is not mentioned.

Open and Transparent Government

I'm not sure what it's going to mean in practice, but I like Obama's latest:

To make the government more accountable, Obama said he would post all non-emergency bills online for five days before he signed them into law, allowing Americans a chance to weigh in on the legislation. In addition, he said he would post all meetings between lobbyists and government agencies online.

Obama said he would require Cabinet officials to speak to Americans via national broadband town-hall style meetings to discuss issues at their agencies. He also pledged to issue an executive order that information about the government's operations must be released to those seeking it unless it could harm a protected interest.

Questions for the Democrats on Immigration

Here are some questions on immigration for the Democratic Presidential candidates:

1) Should there be any limits on the number of people who can come live in the U.S. each year?

2) Should there be any limits on the number of people who can become American citizens each year?

3) If you think there should be limits under 1) or 2), how should those limits be determined?

4) If there are limits under 1), and people come to live in the U.S. in ways that evade those limits, what should happen to them? Should they be allowed to stay here?

Freedom from the Press

I just don't understand these sorts of decisions:

Harry Potter author J.K. Rowling Tuesday lost a court fight in London to ban publication of a photograph of her young son.

Rowling, whose seventh and final Potter book was released worldwide last month to a frenzy of excitement and record sales, had argued at the High Court that her son David's right to privacy was invaded by the picture.

The photograph, showing Rowling and her husband Neil Murray with the child in a buggy, was taken by a picture agency photographer using a long-range lens in a street in her home city of Edinburgh in 2004.

The boy, now aged four, was 20 months old at the time. Rowling and Murray took action in the child's name against the agency, Big Pictures (UK) and Express Newspapers, seeking damages and an injunction banning further publication of the shot or any others of the boy.

But the court ruled that the law would not allow Rowling to carve out a press-free zone for her children and struck out proceedings against the photo agency. Express Newspapers had separately settled the claim.

Forget the law for a second. On policy grounds, does this make sense? Should the press have the right to publish pictures of a 20 month old kid who is not doing anything newsworthy? If so, why? Seems crazy to me.

Giuliani's Health Care Plan

I like the sound of this:

"Republican presidential hopeful Rudy Giuliani on Tuesday offered a consumer-oriented solution to the nation's health care woes that relies on giving individuals tax credits to purchase private insurance.

Critical to Giuliani's plan is a $15,000 tax deduction for families to buy private health insurance, instead of getting insurance through employers. Any leftover funds could be rolled over year-to-year for medical expenses."

Could this actually be passed by Congress if he were elected?

Meeting with Dictators

I'm not sure what all the fuss is about in relation to Obama's comments about meeting with evil dictators:

Barack Obama's offer to meet without precondition with leaders of renegade nations such as Cuba, North Korea and Iran touched off a war of words, with rival Hillary Rodham Clinton calling him naive and Obama linking her to President Bush's diplomacy.

I know the conventional wisdom is that you don't meet with them, but what does that accomplish exactly? I don't see the harm in meeting with, say, Castro, as it would provide a nice opportunity to tell him what an awful person he is.

NHL Expansion: How about Milwaukee?

Not that I think the NHL needs to expand, but if they were to do so, why are they talking about Las Vegas and Kansas City? Why not Milwaukee, where people actually play and follow hockey?

Obama Steps In It

Apparently, Obama says we should teach sex education to kindergarteners:

ABC News' Teddy Davis and Lindsey Ellerson Report: Sen. Barack Obama, D-Ill., told Planned Parenthood Tuesday that sex education for kindergarteners, as long as it is "age-appropriate," is "the right thing to do."

"I remember Alan Keyes . . . I remember him using this in his campaign against me," Obama said in reference to the conservative firebrand who ran against him for the U.S. Senate in 2004. Sex education for kindergarteners had become an issue in his race against Keyes because of Obama’s work on the issue as chairman of the health committee in the Illinois state Senate. "'Barack Obama supports teaching sex education to kindergarteners,'" said Obama mimicking Keyes' distinctive style of speech. "Which -- I didn’t know what to tell him (laughter)."

"But it’s the right thing to do," Obama continued, "to provide age-appropriate sex education, science-based sex education in schools."
...

When Obama's campaign was asked by ABC News to explain what kind of sex education Obama considers "age appropriate" for kindergarteners, the Obama campaign pointed to an Oct. 6, 2004 story from the Daily Herald in which Obama had "moved to clarify" in his Senate campaign that he "does not support teaching explicit sex education to children in kindergarten. . . The legislation in question was a state Senate measure last year that aimed to update Illinois' sex education standards with 'medically accurate' information . . . 'Nobody's suggesting that kindergartners are going to be getting information about sex in the way that we think about it,' Obama said. 'If they ask a teacher 'where do babies come from,' that providing information that the fact is that it's not a stork is probably not an unhealthy thing. Although again, that's going to be determined on a case by case basis by local communities and local school boards.'"

I don't know what he has in mind exactly, but he's going to have a lot of trouble extricating himself from this mess.

ADDED: Obama's side of things:

Obama spokesman Bill Burton tells First Read: "You can teach a kid about what's appropriate and not appropriate to protect them from predators out there." In addition, he issued a document showing that the Oregon Department of Education has guidelines for sex education for children in grades K-3 (which includes understanding the difference between a good touch and a bad touch), and that the
Sexuality Information And Education Council of the United States has curriculum for those in kindergarten.

OK, maybe I see what he's going for, although I'm still not a fan of it. But he really needs to be a lot more clear about what he's saying. You can't go out and talk about sex ed for 5 year olds without explaining exactly what you have in mind.

An Obama Court

Here's what Obama wants to see in a Supreme Court justice:

"We need somebody who's got the heart, the empathy, to recognize what it's like to be a young teenage mom. The empathy to understand what it's like to be poor, or African-American, or gay, or disabled, or old. And that's the criteria by which I'm going to be selecting my judges."

Oh, man, he is losing me here. I want the opposite: I want a callous misanthrope who cares only about the meaning of words. Leave the empathy to the legislature.

The School Desegregation Cases

I'm fairly happy with Justice Kennedy's opinion in the school desegregation cases. As I read it, he is saying that you can use race as a factor in deciding which students go to which school, but you have to be very careful not too overemphasize it and you must explore other options. On the facts here, these school districts were not careful enough. That seems right to me in a situation where merit was not involved, but rather a simple objective of keeping racial balance at the various schools in a district.

The U.S. Health Care System -- Not Really a Free Market

In this week's Economics Focus, the Economist explains:

TO MANY outside the United States, America's health-care system might seem an example of capitalism at its rawest. Europeans and Canadians enjoy universal health care and cheap drugs thanks to government-run systems, the argument goes, but the market-based approach taken by the world's richest nation leaves many millions uninsured and leads the rest to pay the highest drugs prices in the world. Such doubts are sure to be reinforced by this week's release of Michael Moore's “Sicko”, a much-trumpeted new film on health care that bashes the free-market Yankee model even as it praises the dirigiste alternative north of the border.

So is America's health system really red in tooth and claw? Hardly, according to a growing body of academic evidence. As a result of interference at the federal and state levels, health care is one of America's most heavily regulated industries. Indeed, its muddled approach to health-care regulation may act as a massive drag on the American economy—what one expert has called “a $169 billion hidden tax”.

I think it's good that the Economist is writing about this. There do seem to be many people who see private companies operating in the U.S. health care market and on this basis argue that it is the private-ness of the industry that makes it costly and ineffective. In reality, though, there is massive regulation in this area, and it is this regulation that is, arguably, the main problem. Take just two examples. First, health care benefits are tax-deductible, so big companies have an incentive to offer excessive health care packages, which, of course, are tied to employment with them. Second, health care insurance is regulated state-by-state, and thus moving states means you have to abandon your old plan and apply for a new one.

Updike on the Depression

I've just read John Updike's New Yorker review of Amity Shlaes' book on the depression. It was a bizarre review. Most of the review is spent summarizing the book's thesis, in essence that FDR's interventionist policies hurt more than helped, and we would have been better off with someone less interventionist. I was waiting for Updike's rebuttal, but it never really came. Instead, there was this:

My father had been reared a Republican, but he switched parties to vote for Roosevelt and never switched back. His memory of being abandoned by society and big business never left him and, for all his paternal kindness and humorousness, communicated itself to me, along with his preference for the political party that offered “the forgotten man” the better break. Roosevelt made such people feel less alone. The impression of recovery—the impression that a President was bending the old rules and, drawing upon his own courage and flamboyance in adversity and illness, stirring things up on behalf of the down-and-out—mattered more than any miscalculations in the moot mathematics of economics.

Let me try to understand. It's better to have someone who gives the impression of helping poor people than someone who actually helps poor people? Really?

He also says:

Business, of which Shlaes is so solicitous, is basically merciless, geared to maximize profit. Government is ultimately a human transaction, and Roosevelt put a cheerful, defiant, caring face on government at a time when faith in democracy was ebbing throughout the Western world.

I'm not sure what it means to say that government is a "human transaction," but as for the "faith in democracy" part, where exactly does FDR's court-packing plan (mentioned in the article) fit in?

Leegin (Mis-)Reporting

Writing about the Leegin decision, David Savage of the LA Times says:

The decision, coming on the last day of the court's term, was the 15th this year that benefits business and corporations by shielding them from lawsuits and legal claims.

Now, I don't know what the other 14 decisions he is referring to are, but does this decision really "benefit[] businesses and corporations"? Sure, it benefits some corporations, specifically producers. But it also hurts others, specifically retailers. Being very charitable in my criticism, I would say his characterization is a bit of a stretch.

Merit-Based Pay at the Law Firm

Howrey "is ditching its lockstep compensation for its associates. Traditionally, Big Law pays its associates based on seniority — $160,000 for first years, $170,000 for second years and so on. But beginning next year Howrey reportedly will introduce a merit-based system of advancement and compensation for associates."

Look, merit pay, for teachers, lawyers, whomever, is great in theory. But it's very hard in practice to make subtle distinctions in performance between people in these professions. It's not like baseball, where performance is fairly easy to measure. At Howrey, the result is likely to be that everyone who does not get the top salary will be pretty pissed, which means that most of the lawyers there will be even unhappier than usual.

Resale Price Maintenance: Per Se Rule Overturned

For a sophisticated analysis of today's Supreme Court decision overruling the per se illegality for resale price maintenance, see this post by Randy Picker. My less sophisticated take is: The new rule makes perfect sense because producers could set prices anyway if they distributed the products themselves.

Public School Funding

Here's something I don't understand. Why do we let the children of the very rich attend grade school for free? Granted, many of them go to private school, but I do know some well off people who went to public school. Why don't we make them pay the actual cost? Why subsidize (as per the last post) Warren Buffett's kids?

Tax Fairness

Greg Mankiw notes how Warren Buffett

slammed a system that allows the very rich to pay taxes at a lower rate than the middle class.

Buffett cited himself, the third-richest person in the world, as an example. Last year, Buffett said, he was taxed at 17.7 percent on his taxable income of more than $46 million. His receptionist was taxed at about 30 percent.

Mankiw points out in response:

You might wonder how Mr Buffett managed such a low tax rate. Most likely, it arose because corporate dividends and capital gains are taxed at only 15 percent. But the corporate income that funded those returns was already taxed at the corporate level, where the tax rate is 35 percent. Mr Buffett seems to be ignoring the first round of taxation.

I think that's a pretty good point. Here's another. Assuming that the receptionist has a very generous salary of 100,000 dollars a year, she would have paid 30K in taxes. By contrast, by my rough calculation Buffett paid 8,142,000 dollars. If that's not clear enough, let me spell it out: The rich pay most of our taxes.

Greg LeMond's Doping Crusade

I think it's great that Greg LeMond has been pushing so hard for today's cyclists to come clean about doping. However, what would be even better is if he would tell all about what drugs, if any, he took when he was cycling, and also what drugs he observed others taking. It would set a nice example. As it stands now, his view seems to be that he is exempt from scrutiny.

How to use Tim Wakefield

There are many great ways to use Tim Wakefield. The Red Sox have been lucky to have him all these years.

Here's one new way that just occurred to me (apologies to anyone else who has already suggested this). Have him pitch to the first 9 batters only, and do this every two or three games. Then bring in the normal starter in relief. This could be a great way to throw off every hitter's timing and swing for the rest of the game.

Catch 22

A Wisconsin professor calls Catch 22 the most overrated novel of the 20th century. I loved the book, so I feel compelled to respond to a couple of his points.

He says:

it consists of basically the same joke over and over again: military people are evil and stupid.

I didn't see it that way at all. Sure, the book was about military people, and most of them were stupid and some were evil. But I took the point to be not that "military people are evil and stupid," but rather that many people are evil and stupid and that if you put these people into the military they will continue to act that way, with potentially horrible consequences. So it's not an insult directed at military people, but a commentary on the inevitable consequences of placing ordinary people at war.

He also says:

Satire always has an intellectual point. The point here seems to be that war is a bad thing.

Again, that's not how I saw it. I thought his point was that from the individual low-ranking soldier's point of view, war is going to seem pretty awful. That doesn't mean that all wars are bad from a broader perspective. It just means that having to kill and possibly be killed is an awful experience.

Fast, Unhealthy Food

The AP reports:

Burger King, McDonald's and Wendy's are among the chains planning to defy New York City's new rule that they begin posting calories on menus Sunday.

While I'm generally skeptical of regulation, a simple rule like this one, which requires disclosure of information to consumers for health purposes, seems to impose only a small burden while creating an enormous benefit. I really hope that these kinds of rules spread around the country. On the other hand, the fast food joints do make a good point:

Fast food chains also say they have been unfairly singled because the new rule only applies to restaurants that serve standardized portions and offer nutritional information voluntarily.

There's a good argument for applying the rule across the board to everyone. To the argument that it's too much of a burden on smaller restaurants, I would say that the burden could be placed on the supplier to provide the information, and then the restuarant won't have much work to do.

Will Bloomberg Run?

Here's my take. All he has said that I've seen is "I'm not running." Seems clear to me he is not saying "I will not run." My guess: If Obama gets the nomination (or looks likes he will), Bloomberg will not run; if Hillary gets it (or looks like she will), Bloomberg will run. There's just no question that Hillary is flawed and beatable. If she's the Democratic nominee, there is an opening for an independent to jump in.

The Other Side is Unreasonable

I posted before about how Al Gore says Republicans are "assaulting reason." But it's clear that it's not only the left that criticizes its opponents as "unreasonable." Bryan Caplan, a George Mason economics professor, has written "The Myth of the Rational Voter," in which part of his thesis is that voters are too dumb/uninformed to choose limited government/free market policies. I agree with his choice of policies, but I'm not convinced that the opponents are dumb. They may very well just want a different kind of society than I do.

Death Penalty Deterrence

Death penalty proponents are fighting back against the recent wave of anti-death penalty sentiment:

"Science does really draw a conclusion. It did. There is no question about it," said Naci Mocan, an economics professor at the University of Colorado at Denver. "The conclusion is there is a deterrent effect."

A 2003 study he co-authored, and a 2006 study that re-examined the data, found that each execution results in five fewer homicides, and commuting a death sentence means five more homicides. "The results are robust, they don't really go away," he said. "I oppose the death penalty. But my results show that the death penalty (deters) — what am I going to do, hide them?"

Statistical studies like his are among a dozen papers since 2001 that capital punishment has deterrent effects. They all explore the same basic theory — if the cost of something (be it the purchase of an apple or the act of killing someone) becomes too high, people will change their behavior (forego apples or shy from murder).

I agree with these conclusions, although my main deterrence argument is more general. Having a death penalty sends a general message to society that crime will not be tolerated, and thus reduces criminal behavior more broadly than just murder.

Obama in the Lead ...

... in one poll anyway. Hopefully more to follow.

Faith in the 2008 Campaign

It strikes me that the three leading Dems may be talking more about their faith than the three leading Republicans. Very strange turn of events.

Obama Signs on to the Fair Pay Act: Ugh

I want to support Barack Obama. I like him. I think he is very intelligent. He has a lot of charisma. But I worry about his economics. Now I have more reason for concern. Apparently, he has signed on to the Fair Pay Act, which aims to require equal salaries for people in "equivalent" jobs. The theory is that jobs that are disproportionately held by women pay less than jobs that are disproportionately held by men. I have no doubt this is true. Engineering jobs pay more than librarian positions, for example. But so what? From what I can tell, engineering jobs pay more because they require more skill. Maybe this is not a good example for the Fair Pay advocates' cause, but I'm not sure which positions they have in mind. Oh, OK, I'll do a little research. According to Tom Harkin, who introduced the bill, here's an example:

For example, social workers (a female-dominated field) are paid less than probation officers (a male-dominated field) even though both jobs require similar levels of skill, effort, and responsibility.

Wow, that's the example they came up with to make their case? With no further explanation of how these jobs are equivalent? At first glance, I would have to say that probation officers have things tougher, dealing with violent criminals and all.

Anyway, the point is, Obama's support for this kind of thing is making it hard for me to vote for him. I wish he'd talk to his economics advisors about this one.