Archives: 08/2010

Mayor Bloomberg Loves Property Rights

A front-page story in today’s New York Times begins:

Michael R. Bloomberg is a former Wall Street mogul with a passion for the rights of a private property owner.

The story is about the not-really-at-Ground-Zero mosque, of course.

Bloomberg has a passion for property rights — except when the property owner wants to allow smoking on his own property or just wants to keep the property he owns even if a richer person wants it.

Paul Ryan’s Roadmap, and the Difference between Costs and Spending

Rep. Paul Ryan (R-WI) ably defends his “Roadmap for America’s Future” in today’s Washington Post.  He doesn’t mention Paul Krugman’s attacks thereon, nor should he.  (To read why, consult The Atlantic’s Megan McArdle and Ted Gayer of the Tax Policy Center.)

I haven’t officially weighed in on the health-care aspects of the Roadmap, but hope to do so in the near future.  For the moment, I’ll use Ryan’s oped to stress a distinction that is crucial to thinking clearly about health care costs.

Ryan writes of the dangers of an un-reformed Medicare program (emphasis added):

Under an ever-expansive, all-consuming central government, costs will be contained with Washington’s heavy hand imposing price controls, slashing benefits and arbitrarily rationing seniors’ care.

While those forms of government rationing may reduce spending, that’s not the same as reducing costs.  On the contrary, those rationing measures may increase health care costs.

Suppose Medicare set its prices for hip and knee replacements so low that no medical-device manufacturer would provide the hardware and no surgeon would perform the procedures.  Medicare spending on hip and knee replacements would fall.  But costs may rise: more seniors would be walking around — or not walking around — in severe pain.  Pain and reduced mobility are costs, even if they don’t show up in the federal budget or household budgets.  (Indeed, those costs would be so severe that overall Medicare spending could rise as seniors bought more wheelchairs, sought treatment for pressure sores, etc.).  This is the main reason conservatives criticize Canada’s Medicare system and the British National Health Service: reducing health care spending often increases costs.

I therefore request universal compliance with Cannon’s First Rule of Economic Literacy: Never say costs when you mean spending.

Social Science Friday

Science!

A few odds and ends from the social science blogosphere:

More Nonsense about the Trade Deficit

It has become conventional wisdom that a rising trade deficit is bad news for the economy. This week’s announcement of an expanding deficit in June prompted such headlines today as this one in the news pages of the Wall Street Journal: “Wider Trade Gap Signals Weak Growth.” As my colleague David Boaz blogged earlier today, the trade deficit is even blamed for daily swings in the stock market.

I’ve been studying and writing about the trade deficit for years, and devoted a whole chapter of my 2009 Cato book Mad about Trade to the subject, and I keep coming back to a basic question: If the trade deficit signals weak growth, why does the U.S. economy seem to perform so much better during periods when the trade deficit is growing, and so much worse when the trade deficit is shrinking?

Think back to the 1990s, the “goldilocks economy” when growth was strong, jobs plentiful, and inflation low. That was also a time of rising trade deficits. In fact, the trade gap grew for eight years in a row, rising from $77 billion in 1991 to $455 billion in 2000. In that same period, the unemployment rate dropped from 7.3 to 3.9 percent.

Again, in the middle of the George W. Bush presidency, the trade gap grew for five straight years, during a period when the economy expanded and the unemployment rate fell from 5.7 to 4.4 percent.

In contrast, the trade deficit invariably shrinks during periods of recession. The trade deficit fell by more than half from 2007 to 2009 as domestic demand and imports plunged and unemployment soared. Sagging domestic demand means fewer imports.

Of course, I’m not arguing that a bigger trade deficit stimulates the economy. I am arguing, contrary to the conventional wisdom reflected in this morning’s headlines, that an expanding trade deficit does not appear to be a drag on growth. In fact, the plain evidence is that an expanding trade deficit is more often than not a signal of stronger growth.

‘Mountain of Debt’

The White House Office of Management and Budget homepage currently features the following quote from the president:

President Obama says he wants to “invest in our people without leaving them a mountain of debt.”

That’s a curious statement because the Congressional Budget Office’s analysis of the president’s current budget proposal projects that publicly held debt as a share of the economy would reach levels last seen at the end of the Second World War.

When the CBO’s numbers are plugged into a bar chart, the projected Obama debt levels (red bars) look like…the upward slope of a mountain (!):

To be fair, Obama’s predecessors – particularly the previous Bush administration – share in the responsibility for the mountainous rise in federal debt. However, that’s all the more reason for the Obama administration to work toward a peak instead of a steeper incline.

Cal Thomas Fulminates against Freedom

Cal Thomas, who bills himself as “America’s #1 nationally syndicated columnist,” rose to fame as the vice president of Jerry Falwell’s Moral Majority in its heyday, though you won’t find that fact in any of his official biographies. But you could figure it out by reading his columns. In his latest, on the California gay marriage decision, he ranges from factual inaccuracy to a revelation of just how reactionary and authoritarian he really is, to a really striking biblical citation.

He starts by denouncing the “decision by a single, openly gay federal judge.” Not true. Judge Vaughn Walker may be gay, but he has never said so. And Salon magazine demonstrates that any such “evidence” is extraordinarily thin. So this is an extraordinary statement by a man who calls himself a journalist of 40 years’ standing. Not to mention an offensive suggestion that gay people shouldn’t serve as judges. Thomas went so far as to call former attorney general Ed Meese, who recommended Walker to President Ronald Reagan, to ask how such a thing could have happened, and Meese assures him,  “There was absolutely no knowledge, rumor or suspicion” of Vaughn Walker being a homosexual at the time of his nomination by Ronald Reagan. Well, thank God. You’d hate to think that Ronald Reagan would have put an accomplished Republican lawyer on the federal bench if he’d been a homosexual.

Thomas goes on to complain that this (not) “openly gay federal judge” has struck down “the will of 7 million Californians.” Well, yes.  Of course, 6.4 million Californians voted the other way, so I guess on net he struck down the will of 600,000 Californians. And that’s what judges do when they strike down unconstitutional laws. The Supreme Court in Brown v. Board and Loving v. Virginia “struck down the will of tens of millions of Americans.” Libertarians and conservatives asked the Court in the Kelo case to strike down the duly enacted eminent-domain laws of Connecticut.

The sentence continues: The judge also struck down “tradition dating back millennia” – though for much of that time marriage involved one man and more than one woman. And of course traditions are not to be followed blindly. No doubt Cal Thomas thinks that millions, even billions, of Jews, Muslims, Hindus, and Buddhists should leave the faiths of their fathers and follow Christ.

And then the sentence moves to Thomas’s real concern: The judge also struck down “biblical commands, which the judge decided, in his capacity as a false god, to also invalidate.” Does Thomas really believe that the judges of the United States, operating under a Constitution that makes no mention of God, should obey “biblical commands”? It’s true that the Virginia trial judge who convicted the Lovings of miscegenation did rule that “Almighty God created the races white, black, yellow, malay and red, and he placed them on separate continents. And but for the interference with his arrangement there would be no cause for such marriages. The fact that he separated the races shows that he did not intend for the races to mix.” He thought he was following biblical commands. But the Supreme Court overruled that judge.

Thomas is fulminating against gay marriage and against “judicial vigilantism.” But his real objections to American law and life go much deeper:

We have been spiraling downward for some time, beginning in the ’50s with the Playboy philosophy that gave men permission to avoid the bonds of marriage if they wanted to have sex. In rapid succession came the birth control pill (sex without biological consequences), “no-fault divorce” (nullifying “until death us do part”), cohabitation, easily available pornography, and a tolerance for just about anything except those who deem something intolerable.

Cal Thomas would like to take American life back somewhere before the 1950s, before adults could make their own decisions about sex, before birth control and cohabitation and tolerance. The American people may still be split 50-50 on gay marriage, but they would overwhelmingly reject Thomas’s reactionary vision for society.

How reactionary? Well, consider this:

Muslim fanatics who wish to destroy us are correct in their diagnosis of our moral rot: loss of a fear of God, immodesty, especially among women, materialism and much more.

Which sort of follows from his earlier point:

No less a theological thinker than Abraham Lincoln concluded that our Civil War might have been God’s judgment for America’s toleration of slavery. If that were so, why should “the Almighty,” as Lincoln frequently referred to God, stay His hand in the face of our celebration of same-sex marriage?

A more loving Christian might think that God would punish a nation that practiced slavery, but not a nation that allowed everyone to make a commitment to the person they loved. But surely Katrina, the financial crisis, 9/11, and the BP oil spill are enough punishment, even for a nation that displays a “tolerance for just about anything.” Anything that’s peaceful, anyway, as Leonard Read put it.

Toleration really is the thing that Thomas doesn’t like:

What we tolerate, we get more of, and we have been tolerating a lot since the Age of Aquarius generation began the systematic destruction of what past generations believed they had sacrificed, fought and died to protect.

I wonder how many American soldiers really believed that they went into battle to prevent gay people from marrying the person they love. I’ll bet more of them said they were fighting to protect our freedom, our Constitution, and indeed our religious freedom – for everyone.

Thomas ends his column with a biblical citation for those who want to “understand what happens to people and nations that disregard God”:

“In those days Israel had no king; everyone did as he saw fit.” (Judges 21:25)

Two books later in the Old Testament, in I Samuel 8, the story of Israel and its lack of a king is continued. This is actually one of the most famous passages in the history of liberty and of Western civilization. As we’ll see in a moment, the rest of the story served as a constant reminder that the origins of the State were by no means divinely inspired:

    1: And it came to pass, when Samuel was old, that he made his sons judges over Israel.

3: And his sons walked not in his ways, but took bribes, and perverted judgment.
4: Then all the elders of Israel came to Samuel,
5: And said unto him, Behold, thou art old, and thy sons walk not in thy ways: now make us a king to judge us like all the nations.
6: But the thing displeased Samuel, And Samuel prayed unto the LORD.

7: And the LORD said unto Samuel, Hearken unto the voice of the people

9: yet protest solemnly unto them, and shew them the manner of the king that shall reign over them.
10: And Samuel told all the words of the LORD unto the people that asked of him a king.
11: And he said, This will be the manner of the king that shall reign over you: He will take your sons, and appoint them for himself, and some shall run before his chariots.
12: And he will set them to ear his ground, and to reap his harvest, and to make his instruments of war, and his chariots.
13: And he will take your daughters to be cooks, and to be bakers. 14: And he will take your fields, and your vineyards, and your oliveyards, even the best of them, and give them to his servants.
15: And he will take the tenth of your seed, and of your vineyards, and give to his officers, and to his servants.
16: And he will take your menservants, and your maidservants, and your goodliest young men, and your asses, and put them to his work.
17: He will take the tenth of your sheep: and ye shall be his servants.
18: And ye shall cry out in that day because of your king which ye shall have chosen; and the LORD will not hear you in that day.

19: Nevertheless the people refused to obey the voice of Samuel; and they said, Nay; but we will have a king over us;
20: That we also may be like all the nations; and that our king may judge us, and go out before us, and fight our battles.

21: And Samuel heard all the words of the people, and he rehearsed them in the ears of the LORD.
22: And the LORD said to Samuel, Hearken unto their voice, and make them a king.

God’s warning to the people of Israel – you will be sorry if you choose a king to rule over you – resonated not just in ancient Israel but on down to modern times.  Thomas Paine cited it in Common Sense to remind Americans that “the few good kings” in the 3000 years since Samuel could not “blot out the sinfulness of the origin” of monarchy.  The great historian of liberty, Lord Acton, assuming that all 19th-century British readers were familiar with it, referred casually to Samuel’s “momentous protestation.” And now Cal Thomas thinks this seminal warning against tyranny is a capstone to his tirade against freedom, tolerance, and equality under the law. How sad.

Fordham Feeds the Paranoia

You might recall several weeks back when Chester Finn, president of the Thomas B. Fordham Institute, called people like me “paranoid” for seeing federal money driving states to adopt national education standards as cause for serious concern that (a) the feds will take over schools’ curricula, and (b) the new federal curriculum will be taken over by potent special interests like teachers’ unions. (You know, the kinds of special interests that can get Democrats to give them $10 billion by cutting food stamps.) Well, in last week’s Education Gadfly, Fordham published a piece by Eugenia Kemble, president of the union-dedicated Albert Shanker Institute, saying that national standards demand a national curriculum.

This interesting little happening – Fordham publishing a piece by a union stalwart arguing that a national curriculum must go with national standards – didn’t go unnoticed by fellow paranoiac Greg Forster, who is now in a blog dispute with Kemble. It makes for telling reading, especially Kemble’s rejoinder. It features an all-too-casual use of the charged term “balkanization” to seemingly describe anything not centralized, and utterly fails to mention federal funding when implying that the common standards push is state led and voluntary.

Unfortunately, Kemble mainly just sidesteps Forster’s primary point: Fordham has provided yet more evidence that national standards funded by the feds will lead to  a national curriculum that could very well be controlled by special interests. Heck, Fordham is in league with at least one component of the teachers’ unions here, which is fine if they share the same goals. All Forster is trying to emphasize is that it is ridiculous to call people crazy when they simply point out what so much evidence seems to show.