When Civic Participation Means Shaming A Non-Voter’s Kid

This video, “Playground” [YouTube, Facebook] makes quite an impression. It shows a scene of schoolyard bullying but takes the side of the jeering, taunting mob – in the name of voting. It is one of a series of 30 second videos put out by a group calling itself Civic Innovation Works, encouraging a vote in the general election on November 8 and seemingly intended as public service announcements.  The others in the series appear to be similar in message, but lacking in this one’s outrageousness (although one does present a fantasy about publicly shaming a non-voter).  

On the off chance that Civic Innovation Works was someone’s idea of an elaborate parody I looked them up. I found that Fenton, the well-known progressive/”social change” public relations agency, takes credit for one of the other videos in the series.

So it would look as if they are on the level. It is almost as if they were trying with “Playground” to convince viewers that electoral politics makes people worse.

In One Chart, Everything You Need to Know about Big Government, the Welfare State, and Sweden’s Economy

Sweden punches way above its weight in debates about economic policy. Leftists all over the world (most recently, Bernie Sanders) say the Nordic nation is an example that proves a big welfare state can exist in a rich nation. And since various data sources (such as the IMF’s huge database) show that Sweden is relatively prosperous and also that there’s an onerous fiscal burden of government, this argument is somewhat plausible.

A few folks on the left sometimes even imply that Sweden is a relatively prosperous nation because it has a large public sector. Though the people who make this assertion never bother to provide any data or evidence.

I have five responses when confronted with the why-can’t-we-be-more-like-Sweden argument.

  1. Sweden became rich when government was small. Indeed, until about 1960, the burden of the public sector in Sweden was smaller than it was in the United States. And as late as 1970, Sweden still had less redistribution spending that America had in 1980.
  2. Sweden compensates for bad fiscal policy by having a very pro-market approach to other areas, such as trade policy, regulatory policy, monetary policy, and rule of law and property rights. Indeed, it has more economic freedom than the United States when looking an non-fiscal policies. The same is true for Denmark.
  3. Sweden has suffered from slower growth ever since the welfare state led to large increases in the burden of government spending. This has resulted in Sweden losing ground relative to other nations and dropping in the rankings of per-capita GDP.
  4. Sweden is trying to undo the damage of big government with pro-market reforms. Starting in the 1990s, there have been tax-rate reductions, periods of spending restraint, adoption of personal retirement accounts, and implementation of nationwide school choice.
  5. Sweden doesn’t look quite so good when you learn that Americans of Swedish descent produce 39 percent more economic output, on a per-capita basis, than the Swedes that stayed in Sweden. There’s even a lower poverty rate for Americans of Swedish ancestry compared to the rate for native Swedes.

I think the above information is very powerful. But I’ll also admit that these five points sometimes aren’t very effective in changing minds and educating people because there’s simply too much information to digest.

As such, I’ve always thought it would be helpful to have one compelling visual that clearly shows why Sweden’s experience is actually an argument against big government.

And, thanks to the Professor Deepak Lal of UCLA, who wrote a chapter for a superb book on fiscal policy published by a British think tank, my wish may have been granted. In his chapter, he noted that Sweden’s economic performance stuttered once big government was imposed on the economy.

Though the Swedish model is offered to prove that high levels of social security can be paid for from the cradle to the grave without damaging economic performance, the claim is false (see Figure 1). The Swedish economy, between 1870 and 1950, grew faster on average than any other industrialised economy, and the country became technologically one of the most advanced and richest in the world. From the 1950s Swedish economic growth slowed relative to other industrialised countries. This was due to the expansion of the welfare state and the growth of public – at the expense of private – employment.57 After the Second World War the working population increased by about 1 million: public employment accounted for c. 770,000, private accounted for only 155,000. The crowding out by an inefficient public sector of the efficient private sector has characterised Sweden for nearly half a century.58 From being the fourth richest county in the OECD in 1970 it has fallen to 14th place. Only in France and New Zealand has there been a larger fall in relative wealth.

And here is Figure 1, which should make clear that what’s good in Sweden (rising relative prosperity) was made possible by the era of free markets and small government, and that what’s bad in Sweden (falling relative prosperity) is associated with the adoption and expansion of the welfare state.

But just to make things obvious for any government officials who may be reading this column, I augment the graph by pointing out (in red) the “free-market era” and the “welfare-state era.”

As you can see, credit for the chart actually belongs to Professor Olle Krantz. The version I found in Professor Lal’s chapter is a reproduction, so unfortunately the two axes are not very clear. But all you need to know is that Sweden’s relative economic position fell significantly between the time the welfare state was adopted and the mid 1990s (which presumably reflects the comparative cross-country data that was available when Krantz did his calculations).

You can also see, for what it’s worth, that Sweden’s economy spiked during World War II. There’s no policy lesson in this observation, other than to perhaps note that it’s never a good idea to have your factories bombed.

But the main lesson, which hopefully is abundantly clear, is that big government is a recipe for comparative decline.

Which perhaps explains why Swedish policymakers have spent the past 25 years or so trying to undo some of those mistakes.

Surge in Emergency Department Use Persists in New Oregon Medicaid Study

One of the main arguments proponents of Medicaid expansion make, at least on the fiscal side, is that it would save money as people gaining Medicaid coverage would reduce their use of expensive visits to the Emergency Department (ED). An earlier study from the Oregon Health Insurance Experiment threw some cold water on that theory, as it found that getting Medicaid actually increased the number of ED visits by 40 percent. Some analysts postulated that this increase was only temporary because it was due to either pent-up demand for health care services, or because new enrollees did not have established relationships with doctors. The thinking was that after enrollees became familiar with their coverage or addressed long-gestating health problems, the reductions in ED use and the associated cost savings would materialize.

A new report analyzing a longer time horizon finds that this is not the case, and there is “no evidence that the increase in ED use due to Medicaid coverage is driven by pent-up demand that dissipates over time; the effect on ED use appears to persist over the first two years.” This is another blow to the oft-repeated claim that Medicaid expansion will lead to significant savings from reduced Emergency Department utilization, and the effect actually seems to work in the other direction.

The Oregon case is important because it is one of the few instances of random assignment in health insurance, as the state wanted to expand Medicaid but had funding constraints, so it employed a lottery to determine who would get coverage. 

In this new update, the researchers see if there are any time patterns or signs of dissipation when it comes to the impact of Medicaid percent of the population with an ED visit or the number of ED visits per person. They expand upon the earlier utilization study to analyze the two years following the 2008 lottery and break up into six-month segments to see if there are any signs of the effects dissipating.

As they explain, “there is no statistical or substantive evidence of any time pattern in the effect on ED use on either variable.” In the first six-month tranche Medicaid coverage increased the number of ED visits per person by about 65 percent relative to the control group, and the estimates for the following three periods were similar and mostly statistically indistinguishable from each other. They also find that Medicaid increases the probability of an ED visit in the first period by nine percent, and the impact in the subsequent periods does not differ significantly. 

Estimated Effect of Medicaid Coverage on Emergency Department Use over Time

Source: Finkelstein et al., New England Journal of Medicine (2016).

Seattle Millennials Should Move to Houston

The Seattle Post-Intelligencer says it has found the best Seattle homes for Millennials. Judging by the former paper’s suggestions, Seattle Millennials should move to Houston. Houston may not have Mt. Rainier, but it has beautiful lakes, a sea coast that is just about as nice as Washington’s (though not as nice as Oregon’s), and most important, it doesn’t have urban-growth boundaries which means it has much more affordable housing.

Click any photo to go to the listing for that property.

The P-I’s first suggestion is a 720-square foot, two-bedroom, one-bath home on a 5,000-square-foot lot. On the plus side, the living room has hardwood floors. On the minus side, the asking price is $259,950–and if Seattle’s housing market is anything like Portland’s, it will go for more than that. At the asking price, the cost is $361 per square foot.

As an alternative, allow me to suggest this 720-square-foot home in Houston’s University Area, not too far from downtown. It has new paint and an updated kitchen and, like the Seattle home, it is on a 5,000-square-foot lot. Unlike the Seattle home, the cost is just $86,500, just under a third of the Seattle house. That’s just $120 per square foot–and the sellers will probably accept a little less.

Sen. Mike Lee on Executive Power & Conscientious Electors

This weekend, I sat down with Senator Mike Lee (R-UT) for the Cato Daily Podcast. We discussed executive power, criminal justice reform, the Electoral College and this strange, disappointing election year. Here’s a portion of our discussion:

Caleb Brown: President Obama has said he’s concerned, and I have a bit of a hard time taking some of what he says seriously, he’s concerned about leaving a loaded gun around in the White House for the next President, which is, it’s almost comical.

Senator Mike Lee: That’s wonderful. If that is a deathbed repentance, it’s better than no repentance at all. I would like to see what he means by that. I hope he means the same thing that you or I would mean if we made that kind of a statement, which people like you and I do, say things like that all the time. Look, this President has, in fact, taken a lot of steps in the direction of consolidating power in the Executive Branch. And this has been one of the consistent refrains that you’ve heard from some members of Congress. One of the consistent themes that I’ve tried to follow, is pointing out to Republicans and Democrats alike, in both Houses of Congress, look, regardless of how you feel about this President’s policy, regardless of how you feel about this President’s political orientation, this is a bad practice. This is something that ought to scare the daylights out of any Republican or any Democrat or Libertarian or person of any other political stripe, because this is not American. This is not how we do things.

We don’t live in a kind of government where Presidents can appropriately say if Congress won’t act, I will. That’s kind of scary. Scary because of what it says about the consolidation of power in the minds of the chief executive, in the minds of the American public as far as they regard the executive, it’s also scary for the simple reason that in many respects the law allows them to do precisely that. Because we’ve got so much buildup from so many decades of broad, amorphous, quasi lawmaking, where we basically say we shall have good law in area X, and we hereby delegate to department or agency Y the power to make good law in area X. Well guess who controls department Y? The President, and those he chooses, who normally serve at the pleasure of the President. So, in many respects, Congress has enabled this. Congress has created this monster. And it’s time for Congress to tame the monster once again.

Brown: Is there any appetite to do that this year?

Lee: There is a strong appetite on the part of some members of Congress to do that. I don’t, frankly, sense a lot of appetite from the White House. In fact, aside from this statement which was made very recently and has yet to be followed up by anything substantive that I’m aware of, you don’t ever hear that from the White House. And shockingly, you don’t hear it very much from very many members of Congress. That is starting to change, and I’m going my best to change that, but most members of Congress have become strangely, bizarrely content with allowing for this delegated lawmaking trend to continue. And in fact I wrote a book called Our Lost Constitution, it just came out in paperback, and in Our Lost Constitution I explain that even though our Founding Fathers thought that each branch of government would have a strong, compelling interest to guard jealously its own power, what we see is that in the last few decades the opposite has been true for Congress. Congress has been eager to delegate more and more.

Land Use and Economic Mobility: You Could Have Read It Here First

Wednesday’s Wall Street Journal contains a great page 3 article on how stricter land use regulations are slowing the growth of housing in areas that need it most. Laura Kusisto reports on a developer’s fight to build middle-class housing in downtown San Francisco, but she notes that similar problems can be seen in wealthy communities from New York and Connecticut to San Diego and Portland, Ore. She also cites academic research on the topic:

According to research by Daniel Shoag, an associate professor of public policy at Harvard University, and Peter Ganong, a postdoctoral fellow at the National Bureau of Economic Research, a decadeslong trend in which the income gap between the poorest and richest states steadily closed has been upended by growth in land-use regulations.

Moving to a wealthier area in search of job opportunities has historically been a way to promote economic equality, allowing workers to pursue higher-paying jobs elsewhere. But those wage gains lose their appeal if they are eaten up by higher housing costs. The result: More people stay put and lose out on potential higher incomes.

For on-the-ground reporting, you need newspapers. But you could have read about that paper twice in Cato Institute publications. Regulation magazine editor Peter Van Doren wrote about it in Winter 2013-2014 in his “Working Papers” column on new research (page 78). 

And just two months ago a summary version of the paper appeared in the Research Briefs in Economic Policy series edited by Jeff Miron, director of economic studies. 

I hope state and local policymakers will take note of the findings in this paper.

Stay tuned to the Cato Institute for more ahead-of-the-curve ideas.

GOP Senate Candidates in Tight Races Reject Trump’s Anti-Immigrant Message

As Donald Trump doubled down on his anti-immigration message in last night’s debate, Republican candidates for Senate across the country are not adopting his lines. In fact, they are overwhelmingly going the other way, rejecting mass deportation and endorsing legal immigration and various forms of legalization for those immigrants illegally in the United States. Here are what the candidates in the tightest races are saying:

1. Arizona – John McCain

It comes as little surprise that Sen. McCain, a longtime proponent of immigration reform and coauthor of the Senate 2013 reform bill, should be running on an openly pro-immigrant platform. He touted his accomplishment at his Senate debate last week. “I was able to get immigration reform through the United States Senate,” he said. “That is the very big difference between having working groups and talking about it and legislative accomplishment, and I promise you that the Dreamers were part of immigration reform.”

2. Florida – Marco Rubio

Sen. Rubio also coauthored the 2013 reform bill that passed the Senate. Although he has backed away from that approach, he continued to take a pro-immigration position at his debate. “I personally know people, children included, who are in this country out of status, illegally brought here at a very young age, and I see the sadness that they’re going through. I want to fix the problem,” he said. “The second step would be to modernize our legal immigration system so that it’s not as bureaucratic, and it works better. … Republicans would support doing something very reasonable with people that are not criminals, that have been here a long time.”

3. Illinois – Mark Kirk

Sen. Kirk who voted for the 2013 reform bill defended his pro-immigrant position during his campaign. In a campaign ad in Spanish, he said, “When Donald Trump says bad things about immigrants, I have spoken out against him. I don’t support Trump. I’ve worked with Republicans and Democrats to reduce gang violence in Chicago. And I support immigration reform so families can stay together.”

4. Indiana – Todd Young

Rep. Young has previously endorsed a form of legal status for the unauthorized immigrants in the country. In his race, he appears to have backed off this position a bit, while still taking a much more pro-immigrant position than Trump. “Immigration should be attractive to Americans so long as immigrants come to our country to contribute to our economy and society. I strongly support legal immigration,” he said in response to questions from a local news outlet. “I would consider proposals which require those who have entered the U.S. illegally to apply for their visas from their home countries and not from within the US…. Congress should work to find a rational middle ground between granting an automatic path to citizenship for every illegal immigrant and a program of mass deportation.”