Wednesday, March 29, 2006

The Rise of China

Russel Roberts at Cafe Hayek writes about the non-objectionable nature of the rise of China as wealthy economic power:
A lot of people are worried about China as an economic threat to the United States. I'm not. China's economic success is good for Americans. When Americans buy toys and clothes and iPods made in China it means that we have more people and capital available to make other things.

A variation on the Chinese threat is that someday, if they keep growing, they'll pass us. This is the view that economics is like the Olympics. If you don't finish first, you're stuck with the bronze or silver medal or worse, you don't even get to the medal stand. But economic success is not like the Olympics. It's not a zero sum game. I care about my children's opportunity to live a fully human live, choosing to use their skills as they see fit. A successful China enhances that. I hope China does great in the meanwhile. The Chinese are desperately poor. Who would be so heartless as to hope that they stay that way?

... I am deliberately ignoring China as a military threat. Some people argue that China isn't just competing with us economically, but militarily. Could be that China has militaristic and territorial ambition, whatever that means. On military grounds, it would matter if China is really, really, rich. That's because military competition is a zero sum game. Winning a war usually means that the other side loses. And being rich might make China a more potent military threat. But I actually would argue that Chinese economic growth reduces the chance of military conflict. The more we trade with them and the more our people's interact economically, the less likely we are to fight a war with them.

Roberts may well be right that a rich China is a China we're less likely to go to war with. I think the last time I checked out the CIA's site, I learned that Langley is of the opinion that China's GDP is already something like 2/3rds of the USA's in purchasing power parity (PPP) terms. Now, I know PPP comparisons aren't valid for all purposes, and I also know that China needs to feed and house a lot more people with its output than we do. Presumably this means, all things being equal, there's less money left over for a deep water navy and advanced weapons systems.

Still, by some measurements, China's economy is likely to be larger than America's in a short while -- perhaps in less than ten years. And some day in the not-too-distant future -- imagine in 30 years or so -- China's economy may well be a very good deal larger than America's.

This may not mean all that much to the average American or Chinese when that day arrives. And America is likely to remain a much richer nation than China for the forseeable future. Still, America is on the verge of no longer being the nation state with the largest economy. In my book that means in some ways (not necessarily miltarily) the US will no longer be the single most powerful nation state. I frankly have no idea what types of challenges this situation is going to bring to our future. And I'm quite sure there's not a thing America can do about it. But at the very least it's unsettling.

Monday, January 02, 2006

The cost of securing our southern border

A piece for Political Animal by Steve Benen prompted me to do a bit of back-of-the envelope math on the costs of constructing an effective physical barrier on the southern border of the United States. My conclusion is that the price tag would approach $1 trillion over ten years. The reason for such a high figure is that a border, even a walled-one, is only as good as the army manning it. And that's exactly what we're looking at if we're truly talking about making our southern border impassable -- a sizable standing "army" of border guards. Probably at minimum 200,000 personnel are needed for such a task.

I assure readers that such a figure is hardly an exaggeration. The latest numbers I've seen suggest we currently employ something like 10,000 agents for the entire southern border. We might as well leave it unguarded. Insuring a genuinely secure border with Mexico effectively amounts to installing a significant, permanent military presence.

Remember, nobody works a 168-hour week, so recruiting a border guard of 200,000 would still leave us with only a few dozen agents per mile at peak times -- probably considerably less than that when you consider that a certain percentage of any recruitment drive will go toward staffing the extra, necessary administrative positions. Moreover, politics (and indeed common sense, given the times we live in) would necessitate at least some bolstering of our border with Canada -- a border more than twice as long as that with Mexico.

So again, the numbers I'm suggesting aren't unrealistic, and may well lie toward the low end of what is likely to be effective. Think of what it would cost to train all those people. It can cost upwards of $250k to train some US military personnel. No doubt the per head charge wouldn't be quite so high for border guards, but it must surely be in the tens of thousands. You've obviously got to pay them once they're on staff, and provide benefits. And, of course, you've got to start the whole process over when an agent leaves or is dismissed. Then there's the cost of new facilities. And there's the physical costs of bolstering the border itself. All those constructions costs. All the high tech devices. Two thousand miles worth -- a major engineering project. Plus holding pens. Plus equipment.

I doubt the country can afford it, but even if it could, it's highly doubtful the votes could be found for ripping a whole in the budget large enough to accommodate what would amount to an additional armed service plus a 2,000-mile, Israeli-quality defensive wall.

As I've written before, without comprehensive reform of immigration law -- reform encompassing a significant degree of decriminalization -- illegal immigrants will continue to be a part of the fabric of American life. An emphasis solely on border policing and security tactics can never succeed.

Saturday, December 31, 2005

Health insurance, home equity, and adverse selection

Asymmetrical Information's Winterspeak wrote a piece the other day entitled "Who Pays for Health Care?" that started the typical, lively debate one encounters when the subject is healthcare. One commenter, arguing against governmental intervention to guarantee healthcare access, opined:
I don't see any room for disagreement on this. Anyone who has a substantial amount of home equity can afford to buy health insurance. If you can afford to buy insurance, and you don't because you know the government will bail you out and let you keep your assets anyway, then you're enriching yourself at the expense of taxpayers. It's outright theft...Frankly, I'm perfectly fine with denying government assistance to those who could afford health insurance but didn't buy it. We're not talking about indigents; we're talking about people who deliberately shirked their responsibility to insure themselves in favor of buying a bigger house.
Well, for starters, I'd have to say that the overly sweeping nature of the above statement renders it patently false, no matter what one thinks of the philosophy behind such sentiment. Should any member of such a family suffer from a preexisting condition, it's entirely possible, maybe even probable, that health insurance can't be obtained at any price. Adverse selection is the great leveler in any discussion about the American healthcare system. Of course one could counter this point by saying:
"Too bad -- it's not my fault if my neighbor's kid has was born with a defective heart, and it's not my responsibility to help pay to keep him alive via my tax dollars."
And while I give credit to those who make statements like this for their intellectual honesty and consistency, I think one would have to acknowledge most people simply aren't open to such arguments. And the reason for this is not feelings of altruism. The reason for this is the fact that most people are risk averse. They don't want to rely on the possibility that a charity hospital might help them secure treatment in such a case. They want a guarantee. And know what? Increasingly, I can't say I blame them. I mean, would it be so terrible if the US Government eventually decided to look at other rich countries, chose some of the best and most sensible bits of their healthcare systems (while assiduously avoiding some of the not-so-sensible bits) and created some sort of plan that guaranteed universal healthcare insurance while doing something about costs?

We know such a course of action is feasible, because every other OECD member besides Mexico had done it. Lots of Americans would suddenly have more freedom to start businesses or take jobs that make economic sense (which they can't currently do because they're too afraid to lose coverage). I see a lot of upside, and frankly am unpersuaded that waiting six months for a hip replacement when I'm 80 would be such a high price to pay for a saner, less expensive and less inequitable American healthcare system. And besides, I think an AustroCanadiaEuro-style healthcare plan is coming soon. That battle is over. The task now is to fight for the least terrible, most sensible emulation of these plans for the US.

Indeed, if we did reform right, we could preserve the "safety valve" of a vigorous private healthcare sector that would eliminate queues for those who can afford it. And I must say, last time I looked, Britain, Australia and Canada had robustly growing economies despite their whacky predilection for guaranteeing healthcare access to their citizens. I guess what I'm saying is that although I can concede that a committed libertarian can make a moral case against a governmental universal healthcare guarantee, the purely utilitarian case is looking mighty shaky, and increasingly futile.

When both the waitress pouring your coffee and the attendees of a General Motors board meeting are starting to talk the same language on the issue, one can only conclude that government-guaranteed universal healthcare in the US is finally nearing the point of political feasibility, and maybe even inevitability.

Thursday, December 29, 2005

The heart of a pro-immigration argument

Over at RedState, immigration rears its ugly head frequently as an issue that divides conservatives. The media reports are true: it really is a topic that could sew discord in the GOP in '06 and '08. The inimitable Paul Cella wrote a piece recently, that, among other points, argued that populist actions such as those undertaken by the Minutemen (in this case from Virginia, their primary target was contractors who hire illegals as day-laborers) are part of a long and admirable American tradition:
It is not easy for the day laborers under the new scrutiny. (“The day is ruined. They’re going to scare off the employers,” one says: “When they come, we don’t eat.”) They can hardly be blamed for the studied negligence of the authorities, nor for the avarice of the employers, which together issue in a betrayal of the sovereign will of the republic and the exploitation of the laborers themselves. We have been over this debate a thousand times. I grow weary of engaging in it. Instead I will merely note that this treachery no longer goes unanswered; that the sinews of self-government are not yet wholly enervated; that government which betrays its charge forsakes claim to authority; and that it is not exactly unprecedented in the history of what Churchill so fondly called the Great Republic for decisions to be made outside or even against the inertia of our formal government — which is always merely formal, for among the truths that “we hold” is the one about governments being “instituted among Men, deriving their just powers from the consent of the governed” and the other about “whenever any Form of Government becomes destructive” of those ends to which we have set ourselves, “it is the Right of the People to alter or to abolish it."
Stirring stuff. And while I don't agree in broad terms with Cella's restrictionist take on the immigration debate, his piece got yet another spirited discussion going in the comments section of RedState. One commenter disagreed with my prescription for cutting down on the number of illegals (namely the idea that increasing legal immigration admissions would lessen the incentives for people to immigrate to the US in violation of the law):
Taking in an extra million per year legally will not stop the flow of illegals, and then we'll just wind up with an extra three million immigrants per year instead of two million.
This really cuts to the chase. What exactly is the intellectual justification for the "more legal" leads to "less illegal" position on immigration?

Well, under current US immigration law, the vast majority of foreign, would-be sellers of unskilled labor to the US don't have any choice but to sneak in to the country unless they happen to have relatives here, because we allow only tiny numbers of such people to immigrate legally. If that quota were to increase substantially -- say by at least a half million --immigrating legally to the USA would become a realistic prospect.

Now, obviously there are more than a mere half million people south of the Rio Grande would like to come and work legally in the USA, so getting one's immigration visa would require waiting in line, perhaps for years. But waiting in line would be worth it, because the benefits of coming here legally (as opposed to illegally) are substantial.

Think about it: most illegal immigrants in the United States lead difficult lives. They are subject to abuse by employers. Their housing options are severely constricted. It is difficult or impossible for them to get health insurance. They have an exceedingly difficult time visiting their homelands (because of the difficulty of getting back into the States). Instead of arriving in the US safely and cheaply, they typically face the "privilege" of paying $3k or $4k for a potentially deadly trek through the Arizona desert.

Perhaps most critically, their employment options are extremely narrow. Sure, nearly all illegal immigrants can find work in the black economy, but it's impossible to move up the latter of success in America without a green card. Take a look at the help wanted pages or nearly all employers these days are blunt about the requirement for working papers. The myth that the Wall Street journal crowd (i.e., the Fortune 500) is hoovering up the labor of illegal aliens is just that, a myth. The vast majority of illegals in this country work in low-paid jobs for tiny firms who offer no benefits and minimal chances for advancement.

Now, given the choice of A) immigrating right now illegally to "enjoy" the life of an illegal; or, B) waiting in the queue until the one's number is called to enter the US with a valid immigration visa, which would you prefer?

Clearly the benefits of living in the United States legally (as opposed to being here in violation of immigration law) are substantial. Immigrants are rational actors just like all of us. Right now, they respond to the pernicious set of incentives our faulty policies have created by immigrating to the US in violation of our laws. Fortunately, we have it in our power to change this.

Now, I think an expansion of immigration quotas ought to be accompanied by strong enforcement measures and explicitly assimilationist policies across the board. I'd like us to take a serious look at English-only legislation, and I don't think people who are here illegally are entitled to tax payer-funded beneifts. I would prefer that any amnesty (a policy I also favor) be accompanied by the resumption of a robust deportation policy (targeting those who arrive after the amnesty) lest we send out the wrong signals. I think huge increases in the budget for border agents, smart border technologies, holding pens, etc. are necessary.

But again, I think spending all the money in the world on the "stick" isn't going to get the job done -- and will therefore be an expensive boondogle -- without the "carrot" of increased quotas for people who want to immigrate to the United States legally, work hard, obey the laws, assimilate, and help build a strong America.

And because I believe a robust level of immigration is a desireable good in and of itself, I see nothing but upside from this approach: healthy population growth, a stronger economy, a more secure America with more secure borders, and radically lower numbers of illegal aliens.

Wednesday, December 28, 2005

Those environment hatin' conservatives

Via Stephen Bainbridge comes an Opinion Journal piece from Dartmouth professor Jeffrey Hart, author of The American Conservative Mind Today. Hart's critique of contemporary American conservatism sounds like it boils down to an admonishment for its having strayed too far from Burke. I'll leave it to the reader to determine whether or not Hart's criticisms are largely valid. I think, here, though, he's clearly way off base:
Beauty has been clamorously present in the American Conservative Mind through its almost total absence. The tradition of regard for woodland and wildlife was present from the beginnings of the nation and continued through conservative exemplars such as the Republican Theodore Roosevelt, who established the National Parks. Embarrassingly for conservatives (at least one hopes it is embarrassing), stewardship of the environment is now left mostly to liberal Democrats.

I don't think this is accurate at all. I think it probably is accurate to say "high-wattage demagoguing of the environment issue coupled with extremist positions detrimental to the economy is left mostly to liberal Democrats."

I'd be willing to bet conservatives are just as keen on clean water and air for their children as liberals. And I'd bet my last dollar the former actually get out and enjoy the outdoors at least as much as liberals. Personally (to use one current controversy) I'd join my liberal brethren in opposing oil drilling in ANWR if I thought for a second there's a remote chance such activity will spoil this magnificent place. But I don't think this, and I therefore take the pro-energy stance.

Monday, December 26, 2005

Unions and public attitudes

Kevin Drum, mainstream liberal though he may be, isn't shedding any tears for the New York City's striking transit workers, given their relatively robust wages and benefits:
An average salary of $55,000 a year? That's fine. Sure, it's pretty good money, but my guess is that most people are OK with it anyway. But retiring at age 55, with 25 years on the job, at half salary? I support unions and I support the notion that Americans work too much, but even so that strikes me as indefensible. After all, most people have working lives of 40-50 years, and it's hard to imagine that they have a lot of sympathy for a deal like that. I have to confess that I don't.
One commenter objects to Drum's reservations about the generosity of the workers' retirement program, saying:
Holy Cow! 25 years on a job with a $27,000 a year pension is indefensible? Do you think ANYONE can live on $27K in New York City? Yeah, you're supposed to save, too, but at $55K with two kids in New York that's not so easy.
I basically agree with the commenter that 27 grand is not a lot of money in New York City. But someone who retires at 55 presumably doesn't need to live only on that $27k. Most people of that age are healthy enough to continue to work, at least part time. Indeed, if one has two kids, the decision to stop working itself looks pretty questionable. Moreover, substantial percentages of 55-year old New York City transit workers will undoubtedly be married to spouses who work, too.

I think one item that needs to be mentioned in discussions of cost of living -- especially with respect to expensive blue state cities like New York -- is one's housing situation. The 55 year-old who purchased his home at age 30 (and has since managed to resist the temptation to tap into home equity) is in a far better position to retire early than the person who purchased his home in 2002. Housing is really the dominant factor in the cost of living of expensive metro areas. The difference in the cost of living for the average (say) Brooklynite who purchased his home in 1985 with a $120k mortgage, and his cousin in Queens who bought a home in 2002 with a $385k mortgage, is huge. The former can live not much more expensively than somebody in Little Rock or San Antonio. The latter cannot.

Ultimately, discussions about public sector pay should probably focus on how much the taxpayers (or farepayers) need to pay to attract and keep highly qualified people. The public sector shouldn't overpay any more than private firms should. But if they underpay, service could suffer, and indeed, so could public safety.

I think to a great extent what we're seeing in New York is the effects of the increasing fraying of the employer-provided safety net, and its spillover effects into the public sector. Simply put, what NYC transit employees get from their employer, especially in terms of job security, doesn't look like such a bad deal, even to private sector workers who make a lot more money (but who are subject to a layoff notice at the whim of a board meeting). The job security premium that many public sector workers enjoy is itself worth a lot of money, and in brutal market terms probably means their services can be had these days for less cash and benefits than would otherwise be the case.

Think the NYC transit authority would really have much trouble finding 20 or 30 thousand qualified workers in this day and age, especially in a labor market as vast as that of the tri-state area? It's pretty doubtful, and the union knows it. Everybody knows it. These jobs have long waiting lists of people who would kill to be hired. And that -- and not the threat of judicial fines -- is really why this strike failed

Friday, December 23, 2005

So long, Johnny D.

Boston sports fans, as you'll no doubt have heard, received a nice Christmas gift this year from Johnny Damon, Scott Boras, and one George Steinbrenner:
His hair trimmed and his beard shorn, Johnny Damon put on the pinstripes for the first time Friday after finalizing his $52 million, four-year contract with the New York Yankees. After spending four seasons with the Boston Red Sox, Damon switched sides in baseball's hottest rivalry. He passed his physical Thursday, then went to Salon Ishi on Manhattan's East Side for a new look. With Damon's wife, Michelle, looking on along with a Yankees' photographer, a stylist identified as "Chantal" rid Damon of his facial hair and long locks, putting him in compliance with the code of Yankees owner George Steinbrenner. "First of all, what do you guys think?" Damon said, looking at the cameras and stroking his chin. "Obviously, keep on snapping away."The Boss seemed pleased."He looks like a Yankee, he sounds like a Yankee and he is a Yankee," Steinbrenner said in a statement.
Is all hope of Red Sox success next season vanished? As much as Johnny Damon was a huge component of the '04 World Series team, I think Red Sox fans shouldn't be overly despondent about the team's prospects. I like Dan Drezner's take very much:
...consider that each of the individual trades/signings that the Red Sox have made this offseason can be defended. No one except the Yankees thought Johnny Damon was worth $13 million a year. Trading a backup catcher for a former All-Star second baseman seems like a shrewd move. Renteria was never comfortable in Boston, and in trading him the Red Sox got one of the top ten prospects in all of baseball. Getting Josh Beckett was worth the costs in prospects -- especially since the Sox also got a premier set-up man and a Gold Glove third baseman. The problem isn't with the individual moves -- it's whether one can see an overall plan when the moves are combined.

Second, left unsaid in all the critiques is the fact that the Sox have done a very good job of rebuilding their pitching staff. In the past few months the Sox have lost Mike Myers and Chad Bradford while acquiring Josh Beckett, Guillermo Mota, and Jermaine Van Buren via trade, re-signing Mike Timlin, signing Rudy Seanez, and picking up Jamie Vermilyea via the Rule V draft. They have also developed a raft of quality arms -- Jonathan Papelbon, Manny Delcarmen, Craig Hansen, and Jon Lester -- from their own farm system.

...Finally, it's worth remembering that at this point last year everyone was trashing White Sox GM Ken Williams for a series of moves that laid the foundation for the 2005 team. The only thing that matters is the how the team performs on the field between April and October.
I agree. Thing is, a big part of the story -- and a tiring, "what else is new" part of the story -- is the existence of the financial gulf between the Yankees and everybody else. Boston was willing to gamble $40 odd million on an aging and increasingly injury-prone (albeit terrific in his last few seasons) center fielder. But they were not willing to gamble $50 odd million on the same. For the Yankees, however, it's not really a gamble -- because there's not really any financial risk involved. If Damon underperforms, the Yankees' ability to sign superstars and pay big salaries in the future won't be hampered in the least.

But the Red Sox, as wealthy an organization as they may be, aren't in the same financial situation.

If there is anything positive about the Red Sox' situation right now (and as a Bostonian I've been wildly grasping at straws to find reasons for optimism), it is that they could well have a dominating pitching staff in '06.

I certainly like their arms better than the Yanks' at this point. The Sox can't possibly hope to compete offensively with New York next year -- no way, no how. They certainly need another bat, and I hope they sign a first class hitter.

But when it comes to their most tradeable asset -- Manny Ramirez -- if I were the Sox I'd try and use him to acquire even more pitching. As a long-suffering Red Sox fan, it's a simple article of faith with me that you can NEVER have too much pitching, especially when you don't have a prayer of matching your arch rival's offensive potency.

More often than not, it comes down to pitching in the end.

Tuesday, December 20, 2005

Wartime surveillance

Kevin Drum joins the debate about the administration's use of warantless electronic surveillance.
It's safe to say that whatever Bush's NSA program actually involves, no one would have batted an eyelash if FDR had approved a similar program during World War II. In other words, during a period of genuine, all-out war, it's a dead certainty that nearly everyone agrees that the president does have the power to order warrantless domestic wiretaps for purposes of gathering foreign intelligence...given the nature of the War on Terror, we'll continue to be at war for the next several decades...If this is how we define "wartime," it means that in the century from 1940 to 2040 the president will have had emergency wartime powers for virtually the entire time. But does that make sense? Is anyone really comfortable with the idea that three decades from now the president of the United States will have had wartime executive powers for nearly a continuous century?
I don't know if I'm "comfortable" with it, but I think I am indeed "ok" with it, as long as there exists a high-level conspiracy of ideologues who are seeking to kill large numbers of Americans. It certainly sucks that we're in such a war, but the large degree of suckitdue doesn't make it any less a part of our day to day reality. We really are at war.

Maybe the president ought to ask for congressional approval of non-warrant surveillance. But should he get it, has anything changed, substantively? Either way they'll be able to scan that email you sent abroad for key words. And, given the enemy's use of electronic means of communication, can we afford not to monitor such things?

Putting aside politics for a minute, would any liberal want to deny this power to a President Clinton or Feingold? The key safeguard in my view is not the use of warrants, but rather a strict prohibition of the improper use of "evidence" gathered in the name of national security. No IRS audits or federal (non-terrorism) indictments, in other words, resulting from clues picked up by spooks spying on German Al Qaeda cells.

Sunday, December 18, 2005

Paying for retirement

Megan McArdle addresses the question of the demographic time-bomb, and its likely impact on the economy, and on the country's public finances. Specifically, she looks into the debate on healthcare vs. Social Security (as in, which program is in greater need of repair). She writes:
I agree that the people saying "Social Security's not the problem, Medicare's the problem!" in general show an astonishing lack of interest in fixing Medicare; indeed, they are often the same people who want to add nationalised health insurance to the budget, which seems to betray a lack of commitment to solving our budget discussed many, many times before, the "trust fund" is not, from the perspective of the US taxpayer, funded. I'd argue that the relevant question, for the US taxpayer, is not the accounting distinctions that the US government makes, but what percentage of (tax revenues + borrowing) is devoted to paying Social Security benefits.
Or even more broadly, what percentage of the economy as a whole is devoted to paying Social Security.

My problem, too, with the whole "Medicare/Medicaid is a bigger issue" argument is that, generally speaking, the people making this argument don't want to do anything substantive about either challenge if it doesn't involve raising taxes. The fact is we know of a relatively simple and genuinely pain-free way to reduce the longterm cost of the Social Security program: giving less or no money to retirees who don't need it. Healthcare costs present a more complicated situation, and truly obvious solutions don't present themselves.

Thus, my conclusion is: let's take the low-hanging fruit of entitlement reform -- namely, means-testing Social Security. True, financing Social Security may not be as big a long term threat to living standards as Medicare/M edicaid, but so what? It's still a huge program. It still spends money on rich people who don't need it. Perhaps most perniciously of all, it is funded via a highly regressive tax on jobs.

Yes, maybe we'll only need to be putting an additional 3 points of GDP into Social Security in the year 2050, but that 3 points (nearly $400 billion in 2005 terms) will be wrung out of the relatively narrow base of workers' paychecks and employment prospects if the funding mechanism remains the same as today's. And besides, if the challenges on the healthcare finance front really are as daunting as they appear to be (and I don't doubt they are) we'll need all the help we can get. A smaller Social Security bill can only help the government in this regard.

Sunday, November 27, 2005

Illegal immigration and affordable lettuce

In a piece about California agribusiness, and its reliance on cheap illegal labor, Kevin Drum makes a lot of sense:
…farmers are flatly unwilling to pay their workers more. Whether that's because it would price their produce out of the market or because even a big wage increase wouldn't attract enough legal workers hardly matters. The evidence indicates that farmers would rather let their crops rot in the field than pay ten bucks an hour…we need to recognize that...Americans very clearly want and rely on immigrant labor. The key, then, is not to eliminate it, but to figure out a rational way of limiting illegal immigration without simultaneously demonizing immigrants themselves. This might include programs that make it harder to cross the border illegally, but only if we also provide legal status to many more immigrants than we do now…This combination -- easier legal immigration paired with tougher illegal immigration -- would provide immigrants with a greater incentive to try the legal route instead of the all-too-deadly "season of death" route. It would also provide us with the pool of immigrant labor we obviously want, increase immigrant wages, and cut down on the abuse they suffer from employers who know how easily they can be blackmailed.
Kevin is exactly correct here. I agree that illegal immigration is a security threat. Indeed I view the threat to our security as the primary problem with illegal immigration. If you're an al-Qaeda operative who wants entry into the US, learning a few words of Spanish and dressing as a Honduran peasant must be an appealing strategy.

But dealing with this aspect of the problem of illegal immigration could be dealt with by a decriminalization/rationalization strategy. In fact, I it's likely the only feasible way to deal with this issue, as it's becoming increasingly obvious that relying solely on law enforcement efforts isn't getting the job done.

Now, for the record, I'm not particularly worried one way or another about getting fresh produce. No doubt if California can't provide it, Chile or Brazil will. On the other hand, I don't see the benefit of denying this industry a supply of foreign labor. In other words, all things being equal, I'd prefer to eat California strawberries than foreign ones, and am not at all worried that my ability to eat domestically grown crops is partly contingent upon a slightly higher rate of (immigration-induced) population growth than would be the case if immigration were limited only to the current legal limits (around 900k per year).

I happen to think a modest level of population growth is a desirable "good" in and of itself, whether or not immigration accounts for much of the total. I disagree with those who view population growth as a negative, and immigration as at best a necessary evil that should be minimized as much as possible. Outside of the security issue, I just don't see the great harm in illegal immigration. But I agree that the security threat alone is sufficiently grave for me to want to see the number of people who come to the US in contravention of our laws to be zero.

I'll try a thought experiment. Let's suppose we came up with reforms that minimized illegal immigration, but required increasing legal immigration admissions by, say, 50% (to around 1.5 million annually). I would argue that's a deal we should take. After all, under such a scenario, the amount of immigration would stay about the same, it's just that 99% of it would now be coming through legal, observable channels, unlike the current situation where only perhaps 60% of it is legal. Anyway, a lot people, myself included, would argue that getting a handle on the illegal immigration issue involves just such a strategy.

Wednesday, November 23, 2005

McCain in 2008?

Matthew Yglesias thinks John McCain's perceived strength as a presidential candidate in a general election is illusory. He's apparently of the opinion that the coolness of social conservatives for the Arizona senator would badly hurt him.
McCain has also pulled off the neat trick of alienating cultural conservative leaders without making any substantive concessions to cultural liberals. I know his polling looks good now, but I think if he somehow manages to get the nomination he'll fare much worse than people expect.
I happen to agree with those who say McCain faces a lot obstacles in gaining the GOP nomination. But the issue of his chances in a general election is a different matter. There are a number of variables to consider here, not least of which is the name of his Democratic opponent. I guess the conventional wisdom would have to be that McCain's chances improve should he face a Democrat from the party's left wing. But I'd say all the leading potential candidates are mainstreamish enough to run as centrists. I doubt very much McCain would be facing Al Sharpton in a general election.

My own guess is it will be the Democrats' election to lose in 2008, because after two terms of a controversial Republican president with high negatives, the country will likely be ready for a change. The political conditions present in 2008 are very unlikely to emulate those of 1988, the last time a party won the White House for a third consecutive time. And should the economy be shaky three years from now, it would take a miracle for the Republicans to retain the White House.

But if the economy were in decent shape in 2008, or in the late stages of a boom, then I'd guess McCain would be about as strong a candidate as the Republicans could hope for. Yes, he's conservative, but his penchant for noisy maverickism has given him an aura of sincerity, and voters of all political stripes tend to suffer from slick politician fatigue. This allows many a moderate or liberal to forgive McCain his more right-wing positions. And McCain does depart from the party line on several issues (campaign finance, gun control, the environment).

Ronald Reagan won what, 47 states in 1984? Look at that performance compared to George W. Bush's last year. The latter wasn't even competitive in New York, California, or Illinois. McCain theoretically should be a much more formidable candidate than George W. Bush or a strong conservative such as Sam Brownback, because the Arizonan would force the Democrats to defend blue state territory.

If my hunch is right about 2008, it may not make much of a difference who the GOP puts up, but they could certainly do a lot worse than John McCain. It's getting the nomination that's the real hurdle. For the senator, that hurdle may well be insurmountable.

Saturday, November 19, 2005

Dealing with peak oil

A commenter on a recent Kevin Drum piece opines that carbon-based fuels are "dead" (he's obviously engaging in some hyperbole, as last time I checked, my Toyota doesn't run on electricity), recommends we develop alternatives, and asks why we should delay the inevitable.

But the thing is, we're not delaying the inevitable. If it's inevitable, then by definition it (a post-hydrobarbon future) must arrive. Remember gasoline spiking toward $4/gallon recently? It caused a whole lot of people to opt for the Civic instead of the Explorer, and buy a cleaner furnace and new windows instead of redoing the bathroom. Markets work, and people should try them out some time.

What advocates of free markets should be asking is: "why rush the inevitable?" when that rushing means extracting a great deal of wealth from an economy that will eventually (and inevitably) switch to energy systems that will, with time, make economic sense.

Now, if you've got some favorable tax treatment of the hydrocarbon sector or the automobile industry you'd like to see jettisoned, then I'm all ears. But please, no multi-trillion dollar boondoggles for solar cars and biomass whatnots. I've long sensed that the peak oil theory is valid; but instead of describing a crisis, to me it simply points to the magic work of the invisible hand: when something gets scarce, it gets expensive, and alternatives that were formerly too costly no longer are.

I doubt very much the shift from oil is going to be cataclysmic; rather, it will take place (and indeed is already doing so) over many decades -- perhaps over a century or more -- as it continually gets pricier in real terms and as newly "affordable" (in relative terms) energy alternatives increasingly take oil's place.

Sunday, November 06, 2005

Boston real estate blues

It would appear that the long-awaited correction in the local housing market is finally on. As Robert Gavin writes in the Globe:
Greater Boston's once-sizzling home sales have cooled so much this fall that realtors are reverting to a description not heard in a decade: ''Buyer's market." From the South End to the South Shore to Cape Ann, the list of unsold properties is growing, and so are reductions in asking prices...For the last two Sundays, John Ford, of Ford Realty Inc., held open houses at a two-bedroom South End condo on a strong residential block of Columbus Avenue with parking, patio, and hardly outrageous asking price of $570,000. Not a single person showed up... In Jamaica Plain, even a $70,000 price cut -- to $399,000 -- hasn't generated much interest in a two-bedroom, bi-level condo in a 19th century mansion that has been on the market for about a month. Sunday, only four people, including two curious neighbors, came to an open house. ''My seller is willing" to consider a lower price, said the broker, Anne Connolly, ''but there's no buyers to deal with.” The fall slowdown not only represents a sea change for sellers, who for years have enjoyed multiple offers and higher prices, but also indicates the region's bull housing market is at an end. Real estate agents say a long-predicted market correction appears underway as the gap between the price of housing and peoples' incomes -- now even wider than at peak of the 1980s housing boom -- has become too great to sustain the recent pace of sales and appreciation.
This is worrying most of all, I rekon, because of the issue of timing. It's hard to put one’s figure on a single (or multiple) precipitating event. The last time the region suffered a real estate slump, at the end of the 1980s, these events were: a weakening national economy, a sharp stock market correction, a slowdown in defense spending, and a regional lost bet on the relevance and economic utility of the minicomputer sector.

It’s difficult, though, to see similar parallels in today’s Boston real estate market. The national economy is strengthening. Stocks aren’t booming, but the actual correction in this market ended several years ago. There’s no shakeout in a single industry comparable to what the region experienced fifteen years ago as the likes of Digital and Wang saw their fortunes sink. There was the recent bursting of the dotcom bubble, of course, but the worst of this shakeout was pretty much over by ’03 or so; in retrospect it was a remarkably quick downfall – nothing like the slow, agonizing, multi-year death spiral that snuffed the minicomputer sector out of existence.

That's not to say recent economic events haven't hit the Boston area hard; there's no question that the region's economy has suffered some fairly nasty setbacks of late. Massachusetts as a whole appears to have bled jobs for the first several years of this decade. Population growth has been minimal, and appears to have turned negative of late. But that’s just the point: the real estate sector has been buoyant, even booming, throughout this gloomy period.

And the recent uptick in mortgage rates has been only that – an uptick. Fixed 30s can still be had in the low sixes. So you can’t really even blame the usual suspect, interest rates, for why this region’s real estate market is sagging.

Thus, the cyclical timing of this real estate correction, if indeed one is beginnig to occur, is problematic. One would expect a downturn in the property market to occur simultaneously with some of the aforementioned negative economic trends. I mean, when population and jobs are decreasing, you’d normally expect house prices to accompany these statistics downwards.

If anything, I suspect the job market in eastern Massachusetts has strengthened somewhat over the last couple of years. Largely that’s a function of the fact that workers are in somewhat shorter supply as many have left the state. But it’s also the case that many of the state’s weakest firms (especially in the dotcom sector) simply no longer exist, and the firms that survive are, almost by definition, stronger. So what we have here is a case where the local real estate market is sliding into a correction even as the national economy continues to strengthen, and the local employment picture is brighter than it might have been a couple of years ago.

My guess is what’s happening here is that the economy in Massachusetts has, since the late 90s, been weaker than anyone has realized, but that the property boom has masked this situation. The fact is, this is a very costly place in which to live and do business. When you can use your house’s booming value as an ever-expanding credit card, this reality is hidden from you. But such a state of affairs is not sustainable forever.

So, add one part tepid job growth to two parts higher fuel costs and throw in a dash of higher interest rates and unsustainable debt, and you’ve got a recipe for lower house prices. If the job market is indeed (as I think it may be) strengthening a bit in the region, a fairly high price floor could conceivably be placed under the correction, and little damage caused. I don’t think anybody will have cause to complain if all we see out of this downturn is a ten or twelve point drop in house prices. I also suspect pent-up demand could well exert a similar effect to that of an improving jobs picture: lots of people have been priced out of the region’s housing market, and many of them may well rush in to buy at the first concrete signs of a sustained price correction.

But interest rates are the X factor. It would nice for Greater Boston if the debt markets were as regional as the market for property. But this, alas, is not the case. Interest rates are set by national, and indeed global, market forces. The latest GDP figures are about the last news I’d want to read if I were planning on putting a home on the market in these parts any times soon, because this robust economic growth, coupled with recent inflation figures, means that interest rates are unlikely to come down any times soon, and are likely headed upwards. And house prices, as if I need to remind anyone, move in the opposite direction as interest rates.

The dignity of labor

I'm about as pro-immigrant as they come, but if France doesn't take a serious look at its immigration policy, they're just crazy. If things are this bad among the Islamic subculture communities when they're 10% of the population, imagine the difficulties France will be facing in 30 or 40 years' time. We're talking about an existential threat to la Patrie's liberal culture and political order (for all I know maybe they have already made it difficult to immigrate if you're from an Islamic country, but if so, they should continue down this path).

The French ought to implement a system whereby being from a nation with a major terrorism problem counts against your immigration application, points-wise. That way they don't have to out-and-out discriminate on the basis of religion. Fair? Maybe not to the individual from, say, Morocco or Tunisia who's not an OBL supporter. But France's right to preserve its existence ought to outweigh a would-be immigrant's right to a fair French immigration policy.

France should also radically cut back its stupid welfare policies. I'm not talking about junking national healthcare or old age pensions or anything. But clearly the French preference for la sécurité has weakened the economy's ability to utilize human capital. Immigrants to the US come here to do hard, sometimes dangerous, and usually low-paying work. But there is dignity in labor, and it can be a ticket to integration into the wider society.

Idling in state housing projects while waiting for your government check to arrive is just the opposite.

Saturday, November 05, 2005

Proms and inequality

You may have heard about the Catholic school on Long Island whose principal has banned the prom. As is so often the case with these sorts of things, apparently some controversy has been generated, with a tinge of right vs. left flavoring the debate. I gather the principal’s main rationale for his action was to curb the gross and over the top display of conspicuous consumption and decadence that increasingly characterizes these affairs, and all the attendant issues about class and inequality. Matt Yglesias has followed the goings-on. He writes:
My problem is with the pundits cheering him on. If you're worried about inequality, you should use this prom story as a jumping-off point for a column about inequality.
Matt apparently is of the opinion that kvetching about expensive proms is a meaningless diversion from actually doing something about the increasing inequality that characterizes this country. Although to some extent I’m in agreement with him, I think there nonetheless exists a legitimate issue involving, well, peer pressure, competition, and the social disapproval that must surely touch the unfortunate high schooler who can’t compete with the Joneses. Thing is, I do worry about inequality, and wish more would be done about it. But until something is done about it, we'll occasionally have these sorts of situations.

Now, I'm aware the particular school in question is private, but I really think there is something troubling about these $5,000 proms when it comes to public schools. Granted, in America these days, there's an increasing amount of income-based segregation. Not many rich kids live in poor towns, and not many poor ones in the rich. If the socioeconomic strata of 2005 mirrored those of 1970, these insanely expensive school functions would probably be yet more problematic. But still, even in 2005, there are no doubt some poor or merely middle class kids living in places where many of their classmates have a lot more money. I think for such young people, it's not merely a matter of only being able to afford a domestic-made limo, or an off the rack prom gown (as opposed to their Bentley-driving, couture-wearing classmates). It's very likely a matter of not being able to afford to go to the prom at all.

That must hurt if you're a kid.

Balkanization along class lines is not something that America is likely to get out from under any time soon. But there's no reason the public schools have to intensify this process of balkanization. Putting proms back in high school gymnasiums would be one baby step toward a more sane, and more sensitive, social environment for our children.

Thursday, November 03, 2005

Utilitarianism and the overturning of Roe

In a post about Samuel Alito and the chairman of the Senate Judiciary Committee, Kevin Drum writes:
Arlen Specter said…he's looked at Samuel Alito's dissent in Casey and doesn't think it indicates that Alito would vote to overturn Roe v. Wade. That's fine, I suppose, but it doesn't really matter much. After all, Specter's personal interpretation of Alito's opinions is just that: his personal interpretation.
I think Kevin is basically correct here. I sense that Specter, the Republican champion of abortion rights, is not eager to fight his own party on the Alito nomination, and is eager to grasp at any evidence a Justice Alito would support Roe. I suspect, however (and indeed I hope) that nothing of the sort is true. A Justice Alito, after all, will not be bound by Supreme Court precedent the way a Judge Alito currently is. At any rate, one commenter on the thread opined that:
Unless one finds extremely great weight on the proposition that a fetus, even of a few cells, is a person, with all the rights attendant thereto, the right to privacy wins, hands down.
Well, undoubtedly plenty of people are of the opinion that the right to an abortion (not the same thing as the right to privacy, by the way) may win "hands down". But one need not think that a fetus is a human person in order to believe that the government ought to restrict the procedure. One might argue, for instance, that, say, the desirability of promoting population replenishment warrants restriction of abortion. Mind you I'm not arguing that the government should ban abortion to boost the birth rate. But if a sufficient number of voters hold this opinion, and is able to get such a policy enacted, what's to stop them if the courts should allow it? The right to privacy is not absolute, after all.

Now, one might not deem such a policy just, or fair, or wise, but others might disagree. What I'm trying to get at is: should the people, acting through their representatives, find utilitarian reasons for wanting to restrict abortion, why should the non-absolute right to privacy automatically override the people's wishes? Why does the right to an abortion win "hands down" in a democracy that has chosen lawmakers and judges who don't hold this view?

Logically, one's answer cannot be: because privacy is a constitutional right; because even if this is the case, privacy is clearly not an absolute right. The right to privacy is subject to limitations just like all the others. The constitution, for instance, allows the government to stop me from converting my home-grown poppies into opium for personal use. But if I don't wish to sell the opium, and I wish only to allow it to enter my own body through the bloodstream, why doesn't the constitution afford me this activity as a part of my right to privacy?

What is evident is that, although the US constitution may well confirm the fact that a person possesses a right to privacy, it is definitely not clear from the constitution where this right begins and ends, and what, if any, restrictions and limitations the government may or may not impose on this right. For that we need the fine-tuning provided by the legislative branch.

I believe someday in the near future we'll look back on the judiciary's temporary ownership of the issue of abortion with a degree of puzzlement as to its complete lack of wisdom in going anywhere near the management and guardianship of a political controversy for which it is so utterly ill-suited.

Saturday, October 29, 2005

Flat income tax or consumption tax?

Maybe I'm overly cynical, but I suspect the increasing discontent with our government's profligate ways is going to continue to grow for some time. I don't see many possibilities for the emergence of political forces that can actually compel our country's leaders to cut spending. Plenty of people talk a good game about cutting government waste, but they always seem be able to point to waste that exists only in somebody else's district, or in somebody else's pet program. I call it ABBMism (anybody but mine-ism, NIMBYism's first cousin).

Heck, even those lawmakers who claim to be the most rock-ribbed of fiscal conservatives are not above feeding at the trough when it is spending in their home districts that is at stake. Ultimately, it is We The People who must demand fiscal conservatism. If the day arrives when some Congressman votes against pork barrel spending that would flow to his own district, because opinion in his own district demands that he vote that way, we'll finally have reason for hope. Until that day comes, taxpayer subsidies for the study of drunken fish are safe from the chopping block.

I believe if fiscal rectitude ever comes to characterize business in our nation's capital, it will be only after something fundamental and radical changes the dynamic. Fiddling with small details isn't going to get the job done. I'd say a constitutional TABOR amendment would be a huge step in the right direction. I'm open to other ideas, as well. And the one I suspect would have the greatest long term impact on prosperity is overhauling the tax code. Why do I deem this task so vital? Well, when you think about it, even if one could wave a magic wand and cut spending by several hundred billion dollars - thereby eliminating the deficit entirely - we would still be left with a system of taxation that costs the economy billions in compliance costs. Even more perniciously, the tax code directly makes America less prosperous by weakening the economy's capacity to create wealth as it causes economic resources to be allocated in a sub-optimal fashion. Politicians do a really lousy job when it comes to allocating capital, in other words, and you and I are poorer as a result.

So, count me among those who think radical overhaul of the nation's tax code is something every conservative - and indeed every liberal - should be fighting for. But a critical question to ask is, which is the better idea: moving to consumption taxation or shifting to a flat income tax? The scope of an in-depth analysis of the relative merits of these concepts is beyond this simple piece. So I'll simply state that personally, I'm more a fan of junking the income tax altogether in favor of some variety of a consumption tax. I believe there are significant advantages to following this course. But perhaps chief among these is greater political feasibility.

This last point might seem counter-intuitive. After all, junking the income tax completely is probably a more radical notion than moving to a flat income tax. Surely the special interests would be arrayed against such a clear break with current practice. But it is precisely the radical nature of this strategy that makes it more likely to some day be enacted into law. Think about it: it's going to be awfully difficult to say the following words to John Q. Taxpayer:
"We'd like to introduce you to the new, ultra-simple, flat tax. It'll put more money in your pocket in the long-term. And in the short term you can fire your accountant and spend his fees on anything you like. Oh, but there's just one little drawback. You have to kiss your mortgage interest deduction good-bye."
An income tax shorn of the wildly popular mortgage interest deduction just isn't in the cards. But preserving various special interest deductions detracts severely from the whole raison d'être of tax code overhaul, so I don't think the answer to the above dilemma is a milquetoast version of the flat tax that keeps in place this or that bit of politically sensitive tax sheltering. Sure, maybe this year we'd only be looking at tax loopholes for mortgage interest or charitable contributions. But someday soon they'd be calling for the tax code to once again subsidize the latest cause du jour.

No, I think a wiser course of action is to wean ourselves from the very concept of basing a person's tax bill on his contribution to the nation's output via switching to a radically simple, fair, transparent, easy to administer and politically possible consumption tax.

What about you?

Originally appeared in RedState, August 21, 2005

A robust economy?

This piece by Adam C. in RedState discusses yesterday's announcement showing the economy is growing even faster than realized: the third quarter the economy grew at an annual rate of 3.8% well above the long-run average of 2.5%. Core inflation also dropped down to 1.3% from 1.7% last quarter. This marks another in a several year growth spurt that is similar in scope and size to the late 1990s. There are still worries about the housing market and the twin deficits, but so far the economy is still growing at an impressive rate despite those fears.
I'm pretty much in agreement. Although there may well be localized problems, especially in the property market, it appears that nationally, the economy continues to boom along. Not that everything's coming up roses just yet. There does appear to be lingering weakness in the labor market. At least wages don't seem to be rising at a fast clip. But even that trend seems to be in keeping with the way the economy works that day.

As I replied to one commenter who was skeptical of the economy's strength, especially with regard to jobs and wages: Strong GDP growth almost always does translate into more jobs and higher wages eventually, once this growth begins to effect the labor market. This expansion is still relatively young -- we're just finishing our 4th year. We're at about the same point we were back in late '94 or so during the last expansion, and as I recall, the big gains in wages and employment didn't really begin to accumulate until Clinton's second term.

I believe various megatrends are conspiring to produce weaker and shorter recessions (thankfully) followed by longer and stronger expansions (again, thankfully). But it seems that contemporary expansions, while stronger and more robust once they get going (not to mention more durable), tend to be a bit tepid at the outset. This may be largely attributable to the mild, short recessions we now get -- i.e., there isn't much of a nasty low from which to sharply rebound.

So, the net-net is that our recoveries (the earliest part of the expansion) seem a bit weakish at first, and this is reflected in wage growth, which takes a while to get going. But once our economy does rev up, it is capable of creating wealth and prosperity on a scale unmatched in human history.

Sunday, October 23, 2005

Incumbent insurance

One of the places my commentary can be found most often is A few days ago RedState founder and editor Mike Krempasky posted a piece on McCain-Feingold, and asked readers:
Please take a moment to explain to me again why restricting challenger access to resources in the name of "clean campaigns!" is a good idea? Why ought we stack the deck to protect our entrenched political class?
Why indeed? would be my standard reply. But then commenter "Steve M" opined:
It seems to me that redistricting issues create a far greater degree of incumbent protection than any sort of campaign finance reform.
Well, needless to say I think there's some merit to the argument that the whole issue of redistricting is frought with opportunities for well-entrenched incumbents to become more so. Still, redistricting with nefarious, political motives, or gerrymandering, isn't the whole story. As I responded to the commenter:

If you’re referring to gerrymandering, then I'd agree that no doubt politicians do their utmost to insure that the composition of their districts is favorable. But I think campaign finance "reform", which basically amounts to contribution limits, exerts a huge impact as a force for incumbent protection. We see this most vividly in the House of Representatives. The US now has reelection rates in the House that would make Mao proud. As someone who favors GOP control of both branches of Congress, maybe I should be happy with that, but I'm not.

Think about it: incumbents already enjoy a massive advantage in name recognition and in "constituent loyalty" (the latter of which flows from the fact that most voters rightly comprehend that incumbency directly translates into economic benefits for their district, and this sets up a vicious circle that means an incumbent is all the more unbeatable the longer he is in office). Voters respond rationally to this phenomenon by skeptically viewing the candidacy of anyone seeking to unseat "their guy". They know it could hurt their wallets.

Anyway, just equalizing these advantages costs lots of money, especially in urban districts where advertising costs are astronomical. How'd you like to be challenging an incumbent in New York, where media buyers won't even return your call unless you've got a healthy six figure budget? Unless you happen to be a very wealthy candidate who can self-finance, challenging an incumbent means raising lots of money. And that, in turn, is mighty difficult when the law only allows you to do so in tiny increments.

Why not remove these limits entirely and replace them with strict disclosure requirements? If some billionaire thinks your candidacy makes sense, why not allow him to cut you a seven figure check? As long as voters and the press were fully informed about where your money comes from, they'd be free to cast the lever against you if they don't like the source of your funds. I can guarantee you comfortable incumbents just love the current status quo, because unless they happen to bump up against the occasional millionaire candidate, they know they've got a deadly advantage -- it's called the power of incumbency -- in crushing challengers.

Yglesias on vouchers

Matthew Yglesias, in a typical attempt to put a fresh take on the Democratic party line, criticizes New York Times columnist John Tierney, and the latter's support of public education vouchers. Tierney specifically mentions the various controversies that constantly bubble up concerning public education, and makes the observation that vouchers would enable families some protection from such worries. Matt writes:
Tierney himself is a libertarian, so there's no reason to expect him to care about the equity issues here, but he thinks he's devised an argument that should be persuasive to liberals but shouldn't be assuming we care about something other than self-interest.
To this day I don't quite get liberal hysteria surrounding the issue of vouchers. At heart, what is at issue is whether or not, in addition to providing funds to insure that all children are educated, the government should also operate and manage the schools themselves. For the most part in rich democracies, we don't follow this course of action. We allow the recipients of government-funded programs to be consumers. Canadians who use their universal healthcare system don't do so (for the most part) in government-owned and operated hospitals or doctors' offices. They simply have the government pay for the services rendered. Americans who receive Social Security checks or food stamps don't buy their groceries at government-owned and operated supermarkets.

I mean, maybe you can make an argument that the government should own and operate the schools (and tell you which one to attend), but I can't think of anything that's necessary for education that couldn't be handled by a system whereby the government pays (and indeed insures equity in funding), but allows non-governmental units to actually provision the good.

One question I'd like to hear answered from liberals is this: if you had to choose from only the following two alternatives, would you prefer: a) a pure school choice/voucher system where every student in the whole country receives a voucher of equal value or purchasing power, but government no longer manages or operates the schools themselves; or, b) today's status quo, with government operating and managing schools, but with large financial inequities often present.

Anyway, the excerpt Matt cites has Mr. Tierney making the rather obvious and non-startling argument that if families could merely vote with their feet, the innumerable, ugly clashes about ideology (gay proms, pledge of allegiance, evolution, library censorship, etc, ad infinitum) we're constantly hearing about with regard to public education would largely disappear. Or at least Tierney thinks they would. Does that make him selfish? Really? Maybe Tierney just thinks, as lots of libertarians do, that getting government out of the business of operating and managing schools (while leaving it very much in the business of funding, ie., providing equal resources) would improve education. Why must liberals turn any discussion about vouchers into some Manichean shouting match about those "evil" and "selfish" libertarians?

Friday, September 30, 2005

A "Freakonomics" take on contribution limits

There are few things I loathe more than campaign finance so-called reform (CFSCR). And there are few things that frustrate me more than the support to be found for this dreadful idea in certain quarters of the Republican Party. Indeed, the failure of a certain senator from Arizona to recognize the wrongness of his thinking on the subject is the number one reason I cannot envision ever voting for him in a presidential primary, and pray I never have to vote for him in a general election.

It’s not that I’m completely blind to the desirability of guarding against corruption -- and yes, even its mere appearance -- in elections. I might even be willing to concede to CFSCR’s supporters the constitutionality of the government’s exercising such power.

But it has always seemed to me that a robust disclosure requirement is the sole permissible (not to mention practical) method of carrying out this task. A little sunlight goes a long way. We don’t allow children the franchise in this county, after all. Voters are adults. We ought to let them figure out for themselves the implications of Congressman X’s fundraising sources.

Moreover, campaign finance so-called reform carries with it some awfully nasty side effects. Chief among these is how it turns our lawmakers into perpetual mendicants. It is impossibly difficult to raise enough cash to purchase big media market airtime when one may do so only in very small amounts. More than one wag has compared contemporary American campaign fundraising to "filling a bathtub with an eyedropper." And if this state of affairs makes things inconvenient for incumbents, imagine how it affects challengers, who lack the name recognition and official clout of the officeholders they hope to unseat. CFSCR’s double duty as incumbent protection insurance may be its most pernicious feature of all.

But I digress. The point I set out to make is this: one of the underlying assumptions of CFSCR’s supporters, and one of the main justifications they unfailingly cite, is the purportedly airtight relationship between Congressman X’s positions, and the financial contributions Congressman X’s campaign has received from various interested parties (those dark and evil special interests!). I’m talking about vote buying.

We do tend to see some connection between donor and politician, of course. One rather doubts Ted Kennedy gets much cash from the National Rifle Association. And one would be startled to learn Senator Santorum receives support from NARAL.

I have always perceived, though, that campaign money flows in the opposite manner from how people imagine. An abortion rights zealot who could legally give Senator Kennedy a check for $100,000 would not be swaying Teddy’s vote. Rather, such a donor would be financially supporting a candidate who already agrees with him.

In short, the notion that money buys votes in Washington, DC -- the definition of a truism if there ever was one, is highly dubious. And no less a figure of authority than Steven D. Levitt, author of the best-seller Freakonomics, agrees. In a recent New York Times interview, Levitt opines:
To be honest, we do not think Big Money is as pernicious as others do. In "Freakonomics," we show how campaign spending does not affect elections nearly as much as most people think. And there is not that much evidence that politicians vote differently as a result of donations (many donations go to politicians who are already sympathetic to Big Money's causes). Our hunch is that Big Money already knows that money doesn't matter that much in politics. Why do we say that? Because there are relatively low limits on how much Political Action Committees can contribute to campaigns, yet hardly any PAC's max out on these limits. Relative to the government budget, campaign spending is tiny. We believe that Big Money has figured out they don't get a very good return on contributions, so they don't give that much.
I haven’t read Freakonomics yet, but it sounds like a good read. And it sounds like Levitt is a very smart guy.

Which leads me to one final thought, a query for one of our nation's leading statesmen: Senator McCain, may I suggest an addition to your Amazon wish list?

Cross-posted on RedState