Archives: 04/2015

The Right and Wrong Ways to Learn Policy Lessons from Other Countries

Back in the mid-1990s, I was often told that Americans had no interest in what other countries were doing policy-wise. As a result, it was purportedly futile to study policy using international evidence. Ignoring that warning, I wrote a book about education around the world, back to ancient times.

Whether or not the warning was valid at the time, there is now a great deal of interest in other nations’ education policies. Well… in one nation’s in particular: Finland’s. In that country, we are often told, every child is a Socrates—except for the ones who are Jane Austens or Hedy Lamarrs—and this is due, we are told, to one or more of its current education policies (the claimer gets to pick which ones).

A recent op-ed at Cleveland.com not only jumps on this Emulate Fantastic Finland bandwagon, it also purports to use the Finnish example to critique “market-based” education policies in general.

Here’s the main problem with the movement that proclaims “Country X is doing well educationally, so let’s emulate its education system!”: there are a lot of factors outside the classroom that affect educational outcomes, and that differ among countries—culture, resources in the home, etc.—and so it’s difficult to know to what extent a given nation’s performance is due to those factors or to its education policies. Fortunately, there’s a technique that not only circumvents this problem, it turns it to our advantage:

Comparing different sorts of school systems within nations. A study that compares public and private schools within India, for example, or that looks at the effects of private sector competition in Sweden on overall outcomes, eliminates international differences as a factor.  Still, the results of such studies, taken individually, have limited generalizability.

Maryland Seizes Kids (Again) For Walking Home From Park

On Sunday afternoon Montgomery County, Maryland police and Child Protective Services seized the free-range Meitiv children, 10 year old Rafi and 6 year old Dvora, after their parents, Danielle and her husband Sasha, had again let them play by themselves at a park in Silver Spring, just outside D.C. The Meitiv family became the center of a national cause célèbre in January when the county charged the parents with child neglect for letting the two kids walk home from a park. In March, CPS found the neglect charge “unsubstantiated” but puzzlingly deemed the parents “responsible” for it anyway. This time, according to news reports, the kids were again walking back from the park and had gotten to within 1/3 mile of home when police intercepted and picked them up pursuant to a 911 call from “a neighbor” who had spotted them walking alone. The kids were supposed to return home by 6; the police held them for hours in the back of a squad car and did not call the by-then-frantic parents until 8 p.m. 

The Meitivs were reunited with their kids after agreeing to “sign a temporary safety plan to take them home, which means they are not allowed to leave the children unattended at all. …Police say after a thorough investigation, a decision about whether or not the Meitivs will face charges will be made.” 

I’m familiar with downtown Silver Spring, but even if I weren’t I could assure you: this is an outrage, and a big enough one that even in the Washington suburbs, where government often gets the benefit of the doubt, there is widespread outrage. One who’s been writing eloquently on the issue is Washington Post columnist Petula Dvorak (“Our rapid march toward police-state parenting has got to end,” she writes today) who emphasizes what is obvious to older readers – that kids used to walk on the street as a routine part of childhood – by quoting a checklist from a 1979 book on six-year-olds, on first-grade readiness: “Can he travel alone in the neighborhood (four to eight blocks) to store, school, playground, or to a friend’s home?”

Can Inequality Get Worse If Poverty Gets Better?

Jim Tankersley of the Washington Post believes he has discovered “The Big Issue With Hillary Clinton Running Against Inequality”:

“Inequality got worse under Bill Clinton, not better. That’s true if you look at the share of American incomes going to the 1 percent, per economists Emmanuel Saez and Thomas Piketty. It’s also true when you look at the share of American wealth going to the super-super-rich, the top 0.1%, per research by Saez and Gabriel Zucman.”

What this actually reveals is the absurdity of (1) defining inequality solely by top 1% shares of pretax income less government benefits, and (2) judging any strong economic expansion as a failure because top 1% income shares always rise during strong economic expansions.

The graph uses the Congressional Budget Office estimates of top 1% shares, because (unlike Piketty and Saez) they include government benefits as income and subtract federal taxes.  What it shows is that both affluence and poverty are normally highly cyclical. When the top 1 percent’s share of after-tax income jumped from 11.2% in 1996 to 15.2% in 2000, the poverty rate simultaneously dropped from 11% to 8.7%.  Meanwhile, median income, after taxes and benefits, rose from $50,900 in 1993 to $61,400 by 2001, measured in 2011 dollars. 

 

Conversely, when the top 1% share fell from 16.7% in 2007 to about 12% in 2013 (my estimate), the poverty rate rose from 9.8% to 15%.  If we adopt the egalitarians’ top 1% mantra, must we conclude that inequality “got better” lately as poverty got worse?Top 1% and Poverty

The income peak of 2000 is a tough act to beat, and few of us are ahead of it today – least of all the top 1%. The brief surge in top incomes of 2006-2007, like the related speculative surge in housing prices, proved unhealthy and unsustainable. But weak economic performance and high poverty in the past four years is no reason to dismiss the 3.7% average economic growth of 1983-2000 simply because such prolonged prosperity made more people rich.

Tankersley also asks us to “look at the share of American wealth going to the super-super-rich, the top 0.1%, per research by Saez and Gabriel Zucman.”  As I’ve explained in The Wall Street Journal, however, the Saez-Zucman estimates misinterpret shrinking shares of capital gains and investment income still reported on individual tax returns, or shifted from the corporate tax to a pass-through firm, rather than (like most middle-class savings) sheltered in IRA, 529 and 401(k) plans.

It is easy to envision Republican partisans welcoming and adopting the Tankersley theme that Hillary Clinton should now be ashamed of the strong economy of 1996-2000 because “inequality got worse” as many new firms were created and stock prices soared. Yet whenever stocks crashed and the top 1% share fell (making inequality “better”?) the poverty rate rose and median incomes were flat or down.

Some Republican candidates have already alluded to the same pretax, pre-transfer “top 1%” figures to claim inequality worsened under Obama – meaning since 2009.  According to Piketty and Saez, real average incomes of the top 1% were indeed higher in 2013 ($1,119,315) than in the crash of 2009 ($975,884).  Before crashing below $1 million in 2009, though, top 1% incomes had been much higher in 2007 (the equivalent of $1,533, 064 in 2013 dollars) and in 2000 ($1,369,780). The rising tide has not lifted many small boats or big yachts since 2009, because the tide hasn’t risen much; higher tax rates in 2013 certainly didn’t help.

The trouble with Republicans using highly cyclical top 1% statistics as a political weapon against Democrats is that doing so requires capitulating to the divisive and dishonest leftist fallacy that poor people and middle-income people do best when the top 1% is doing badly.

The truth is that the poverty rate fell sharply and middle-incomes rose briskly in President Clinton’s second term, and the top 1% gladly reported more taxable income and paid more taxes as the tax on capital gains was cut from 28% to 20%.  There is a lesson to be learned here, but it is not to denigrate the so-called rising inequality of the late 1990s.

State Spending vs. College Prices

Professor Paul Campos, something of an antagonist of our higher education system, caused a bit of ruckus last week when he wrote in the New York Times that skyrocketing college prices cannot be blamed on falling state appropriations to schools. The reality, of course, is that declining public support could explain some of the increase in prices (though not much at private colleges) but it seems unlikely it would explain all of the increases.

Let’s look at the trends.

First, note that overall state and local support, at least for general operations at public institutions, is indeed down over the last several years. Using data from the latest State Higher Education Finance report – released just yesterday – total state and local support for general operations at public colleges, adjusted for inflation using a higher education-specific index, fell from a peak of $83 billion in 2008 to $73 billion in 2014, a pretty big drop. That said, in 1989 total spending was only $64 billion, which means it has risen since then.

Conrad Black on American Criminal Justice

Conrad Black, writing at National Review Online, blasts the “plague of unjust prosecutions” in the American legal system.

Here is an excerpt: 

Another disturbing recent development in the saga of gonzo American prosecutors is New York State attorney general Eric Schneiderman’s prosecution of the Evans Bank for violating consumer-protection regulations by not adequately making loans available in lower-income, largely minority, areas of Buffalo. These laws are sloppily written and are just pandering to specific income-level and ethnic voters, and enable opportunistic prosecutors to intensify their campaigns for higher office by pandering to targeted voting blocs and trying to superimpose affirmative action over commercial criteria on how banks treat their depositors’ and shareholders’ money. A competing bank chairman, not involved in any such case, Frank Hamlin of Canandaigua National Bank, wrote last month in a letter to his shareholders that he was “extremely suspicious of the arbitrary and capricious manner in which [prosecutors] are abusing the legal system in order to further their own political and economic interests.” Of the prosecution of Evans and another bank, he wrote that “the regulations are vague on explaining what conduct is actually prohibited. The media, of course, does the people no service by merely assuming these prosecutions are based in sound legal theory and fact … [unaware that the] legal system has mutated its focus from time-honored legal principle and justice to efficiency and political expediency… . The reason that 98 percent of prosecutions are settled and not taken to trial … has to do with a fundamental and reasonable lack of faith that our legal system is working properly.” It is a brave stand for a community banker to take opposite an attorney general who seeks votes by abusive grandstanding in the Spitzer-Cuomo tradition (that propelled both of them to the governor’s chair)….  The United States is afflicted by a plague of unjust prosecutions, almost automatic convictions, and often one-way tickets to a bloated, corrupt, and frequently barbarous correctional system. This is not what the founders and guardians of the sweet land of liberty intended.
 
Read the whole thing.
 
For related Cato work, go here and here.
 

Checking in on the Minimum Wage in the TPP

A few weeks ago, I wrote about the possibility of the Trans Pacific Partnership (TPP) saying something about the minimum wage, which the White House had been suggesting it would.  I was a bit skeptical that the TPP would really do anything on this issue, and subsequently, I spoke to a U.S. government official who seemed to indicate that the whole thing was overblown, and nothing much would happen with the minimum wage in TPP.

But now I see that Victoria Guida of Politico has been speaking to higher ranking U.S. government officials, who said the following:

The Trans-Pacific Partnership pact, which the White House is negotiating with 11 countries, would require members to set and enforce laws on minimum wages, maximum work hours and occupational safety and health standards — things no other U.S. trade agreement has done.

Labor Secretary Tom Perez, too, is practiced at explaining why the TPP should matter to its critics, calling the labor provisions of NAFTA and the Central American Free Trade Agreement “woefully insufficient.” Labor obligations, he acknowledges, must be in the main text — as they have been in the most recent free-trade agreements — and coupled with sanctions if countries don’t comply.

The worker protections in the deals with Peru, South Korea, Colombia and Panama stemmed from the “May 10 agreement” that House Democrats reached with the George W. Bush administration in 2007, which covered freedom of association, collective bargaining rights, the elimination of forced or compulsory labor, child labor and employment discrimination. The TPP would go further with its minimum wage, hours and workplace safety standards, Perez said.

More on Krugman’s Missing Libertarians

I wrote last week about Paul Krugman’s claim that “there basically aren’t any libertarians” because “There ought in principle, you might think, be people who are pro-gay-marriage and civil rights in general, but opposed to government retirement and health care programs — that is, libertarians — but there are actually very few.” I offered some evidence from Gallup, Pew, and other polls that in fact there are substantial numbers of voters who hold libertarian-ish views on both economic and social issues.

Bryan Caplan runs some regressions to find that voters’ positions on a variety of issues don’t line up the way Krugman assumes they do. Ilya Somin explores various problems with Krugman’s claims, including this:

It’s also possible to try to justify Krugman’s claim by arguing that most of those people who hold seemingly libertarian views haven’t thought carefully about their implications and are not completely consistent in their beliefs. This is likely true. But it is also true of most conservatives and liberals. Political ignorance and irrationality are very common across the political spectrum and only a small minority of voters think carefully about their views and make a systematic attempt at consistency. Libertarian-leaning voters are not an exception to this trend. But it is worth noting that, controlling for other variables, increasing political knowledge tends to make people more libertarian in their views than they would be otherwise.

Nate Silver, Krugman’s erstwhile New York Times colleague who now runs the FiveThirtyEight website, writes, “There are few libertarians. But many Americans have libertarian views.” He notes:

If Krugman is right, you should see few Americans who are in favor of same-sex marriage but oppose government efforts to reduce income inequality, or vice versa.

As it turns out, however, there are quite a number of them; about 4 in 10 Americans have “inconsistent” views on these issues.

Not actually inconsistent, of course, just not consistently “liberal” or “conservative.” Those “inconsistent” Americans just might be consistently libertarian or anti-libertarian. Silver has a nice matrix, grounded in data from the General Social Survey unlike Krugman’s off-the-cuff matrix:

Nate Silver 2015 chart on libertarian voters

On those two issues, the largest group take liberal positions on both. Substitute different issues – cutting taxes, say, or internet censorship – and you’d get larger numbers of libertarians. But whatever set of issues you choose, you’re likely going to find significant numbers of voters taking positions that don’t fit into Krugman’s two boxes.

Silver speculates on why there seems to be so little political representation for these large groups of voters:

…the hard-core partisans who vote in presidential primaries are much more likely to take consistently liberal or conservative positions than the broader American population, as Krugman’s colleague Nate Cohn points out.

And the parties themselves — who have disproportionate influence in the primaries — have highly partisan views by definition. Almost all voting in the U.S. Congress, on social issues and economic issues alike, can be reduced to a single, left-right dimension.

Does this make any sense? Why should views on (for example) gay marriage, taxation, and U.S. policy toward Iran have much of anything to do with one another? The answer is that it suits the Democratic Party and Republican Party’s mutual best interest to articulate clear and opposing positions on these issues and to present their platforms as being intellectually coherent. The two-party system can come under threat (as it potentially now is in the United Kingdom) when views on important issues cut across party lines.

Maybe that’s why we have so much trouble convincing people that there are libertarian voters.

Nate Silver looked at growing libertarian sentiment back in 2011.