Vaccination and the Social Contract

There are two distinct classes of vaccinations: those for communicable diseases like measles, rubella, and chicken pox, and those for non-communicable ones like tetanus.

There is no reason to be vaccinated against non-communicable diseases if you don’t want to. If you believe that your small chance of getting tetanus isn’t worth the (very, very) much smaller risk of crippling Guillan-Barre syndrome after the vaccination, that’s your business.

But vaccination for communicable diseases is part of a social contract that maintains civil society with a general ethic that no one has the right to harm someone without serious provocation. The fact that someone else may avoid vaccination gives no license to avoidably infect that person, however foolhardy he or she might be.

Getting Returns from Infrastructure

While many interest groups are promoting increased federal spending on infrastructure on the grounds that it will spur economic growth, the Wall Street Journal reports that the “benefits of infrastructure spending [are] not so clear-cut.” Yet there is a simple way to determine whether a particular infrastructure project will generate economic benefits.

Spending on transportation infrastructure, for example, generates benefits when that new infrastructure increases total mobility of people or freight. New infrastructure will increase mobility if it provides transportation that is faster, cheaper, more convenient, and/or safer than before. 

In 1956, Congress created the Interstate Highway System and dedicated federal gas taxes and other highway taxes to that system. The result was the largest public works project in history and one of the most successful. Today, more than 20 percent of all passenger travel and around 15 percent of all freight in the United States is on the interstates.

Moreover, this is all new travel; the interstates didn’t substitute for some other form of travel, as other highway and airline travel) have also significantly increased in those years. (Rail passenger travel decreased, but that decrease was a lot smaller than increases in other travel.) The interstates were successful because they provided transportation that is faster, cheaper (because it saves fuel), more convenient, and safer than before. 

Don’t Raise the Stakes in Ukraine

The release of a report this week by eight former U.S. government officials calling for the United States to send arms to Ukraine has reopened debate on the issue. The dispute is also lent urgency by the recent sickening escalation of violence in the Donbas, especially against civilians, as well as signs that some within the Obama administration may be reconsidering their stance on this issue. As appalling as the ferocity of recent fighting has been, however, the arguments against arming Ukraine remain as solid as they were three months ago. It would raise the stakes with Russia, while offering little prospect of ending the conflict.

The arguments made in the report, cosponsored by Brookings, the Atlantic Council and The Chicago Council on Global Affairs - seem compelling on the surface. The authors argue that the provision of lethal, but solely defensive, weapons would better allow Ukrainian troops to defend themselves against continuing attacks from pro-Russian rebels. As the evidence indicates that the rebels themselves are being supplied with advanced weapons from Moscow, American weapons would place Ukrainian forces on a more even footing. The report further asserts that such weaponry could raise the continued costs of backing the rebels for Moscow, bringing Vladimir Putin to the negotiating table.

Unfortunately, arming Ukraine will cause more problems than it solves. Certainly, such a move would be a propaganda coup for Russia, which has already been using state media to perpetuate the idea that NATO is involved in the crisis. Russian media is extremely good at blurring key facts to make a coherent, anti-Western narrative, even if the narrative itself is fundamentally false. It won’t matter than the weapons are ‘defensive’ in nature; the Russian media can spin this to bolster their arguments that Ukraine’s government is illegitimate and that the conflict is being driven by NATO. It could even increase popular support for the war among the Russian population.

Federal Infrastructure: Often Low Value

President Obama’s budget would raise taxes to fund a $478 billion infrastructure spending plan for highways, transit, and other items. The budget (on page 26) cites an International Monetary Fund study that “highlights the importance of choosing high-efficiency infrastructure projects based on rigorous benefit-cost analysis.”

Unfortunately, that is not the type of “choosing” that the federal government usually does, based on more than a century of experience. As one historical example, here is what I found out about the choosing of federal dam projects in the wake of the 1902 Reclamation Act:

To secure support from the western states, the 1902 legislation required that 51 percent of the revenue from federal land sales in each state be spent on Reclamation projects within that state. However, there wasn’t necessarily a relationship between land-sale revenues and the locations of the best projects. This requirement “seriously compromised the ability of government engineers to select projects objectively.”

After the Reclamation Act passed, the Republican Party saw political advantage in quickly proposing a large number of projects in as many states as possible. This rush to launch projects for political reasons reduced efficiency. By 1907 Reclamation had requested and received congressional approval for 24 projects, with every western state receiving at least one. “Most of the projects were begun in great haste with little attention paid to economics, climate, soil, production, transportation, and markets.”

Much of the federal government’s history with infrastructure is one of pork barrel spending, environmental harm, fudged cost-benefit analyses, and cost overruns. Of course, there are mistakes and waste in state, local, and private infrastructure as well, but federal spending is usually worse for basic structural reasons. Those structural reasons—such as parochial politics and lack of oversight—are likely worse now than in 1902.

Regulation vs. Regulation on Medicine Prices

In a recent piece on the negotiations for a Trans-Pacific Partnership (TPP), economist Joseph Stiglitz was critical of a provision that would prevent governments from using regulation to keep pharmaceutical prices lower.  He argued:

The second strategy [of the TPP] is to undermine government regulation of drug prices. More competition is not the only way to keep down the prices of essential goods and services. Governments can also directly restrain prices through law, or effectively restrain them by denying reimbursement to patients for “overpriced” drugs — thus encouraging companies to bring down their prices to approved levels. These regulatory approaches are especially important in markets where competition is limited, as it is in the drug market. If the United States Trade Representative gets its way, the T.P.P. will limit the ability of partner countries to restrict prices. And the pharmaceutical companies surely hope the “standard” they help set in this agreement will become global — for example, by becoming the starting point for United States negotiations with the European Union over the same issues.

So the way Stiglitz tells it, government regulation – in the form of government influence over pricing – could help bring down medicine prices, but the TPP looks like it will constrain this regulation.

What’s missing from his story, however, is how the prices got so high in the first place.  The prices are high because of, you guessed it, regulation!  This regulation takes the form of 20 year monopolies granted by the government, also known as patents.  Now perhaps we need patents to promote innovation, although I’m sympathetic to those who argue that patent terms should be more flexible.  But regardless, when someone proposes that Regulation X is needed to counteract the negative effects of Regulation Y, I start to question things.  If Regulation Y is such a problem, perhaps we simply need to rethink and revise Regulation Y, rather than add a brand new Regulation X, in the hopes that multiple, conflicting regulations will balance each other out and leave us no worse off than where we started.

Will Greece Unravel the European Experiment?

The Greek elections, in which the radical left-wing Syriza won a near majority, shattered the Brussels consensus.  A breakdown of the European bail-out program might make a Greek exit from the Euro (“Grexit”) the only feasible option.  And the popular revolt against outsiders dictating economic policy may block new attempts to expand Brussels’ power over EU members.

Europe remains the world’s most important economic unit.  However, the EU failed to live up to the grand hopes of the Eurocrats, the academic, bureaucratic, business, media, and political elites who dominate continental politics and policy.  Voters rejected the proposed constitution to expand Brussels’ authority and reduce national independence a decade ago. 

The Eurocrats then repackaged the convoluted constitution as an incomprehensible treaty, for approval by national parliaments. More power shifted to Brussels. 

However, multiplying bureaucracy stifled action.  Loyalty to the EU failed to extend beyond the organization’s sprawling headquarters buildings in Brussels. 

Then the Euro crisis exploded.  The Eurozone created a common currency.  Only 19 of 28 EU members today belong, but in theory all are supposed to eventually join.  Even the Euro’s architects recognized the inherent instability of creating a monetary union without a common budget.

Once in, Athens borrowed at essentially German interest rates and spent wildly.  Soon the loan bills came due and Athens couldn’t pay, which triggered a cascade of crises and bail-outs.

Although nominally concerned about Greece and other aid recipients, many Eurocrats had a larger purpose in mind.  Said German Chancellor Angela Merkel:  “We must overcome the architectural flaws that worked their way into the economic and monetary union during its formation.”  Thus, Euroelites used the crisis to bludgeon the European public to accept further continental consolidation. 

European leaders insisted that no country, no matter how badly indebted, should leave the Eurozone.  The EU would lend more in return for economic austerity.  Although the Greek economy has started growing again, it shrank a quarter since 2008 and unemployment still tops 26 percent. 

That explains why Greeks voted for Syriza, which offered dreamy promises of more spending along with angry demands for debt relief.  The Eurocrats imagined that Tsipras would moderate like so many previous radicals had done.  But so far he and his party have given no indication of retreating. 

Social Mobility and “Locus of Control”

Back when I was the editor of the school paper at my affluent public high school, a bunch of the paper’s staff took a trip to a much poorer high school in Patterson, New Jersey, to meet and talk with some of our counterparts. The gap in resources between the two schools was, as you might guess, pretty striking. But so was this: During a break between meetings, one of my fellow editors casually mentioned to an adult employee of the Patterson schools her college plans—the schools she was applying to, the majors she was considering; unremarkable stuff we discussed with peers and teachers all the time. The adult’s response was something along the lines of: “Oh, that’s great sweetie; it’s wonderful to have dreams”—as though my friend had declared her goal of becoming president, or the next Madonna. This was meant to be an “encouraging” response, of course, but my friend and I were both taken aback at the (presumably unintended) implication that something she’d regarded as a simply the obvious next step in her life—because of course you graduate high school and then go on to college—was a kind of childish fantasy to be indulged, but not taken terribly seriously.

Statistically, the adult’s attitude was, of course, perfectly realistic: The odds of a student at that Patterson school making it into the elite colleges my friend was considering (she ultimately went to Wellesley) were slim indeed. But we both sensed intuitively that this “realistic” attitude, even couched in words of “encouragement,” had to make the odds longer still. Surely some of those students were capable of succeeding in higher education, despite all the barriers we were lucky enough not to face. But if this was the default attitude they imbibed from the adults around them, even at school, how many of them would be too demoralized to really try?

This little anecdote popped into my head as I read a story in The Atlantic’s CityLab, reporting on research that shows Americans believe class mobility in our society is far more common than it really is. Moreover, belief in mobility appears to vary across classes, and the researchers think they know why:

The most interesting group effect occurred on self-reported social status: the higher a participant’s social class, the more that participant tended to overestimate the prospect of social mobility. In other words, a wealthy American appears more likely to believe social status is the direct product of hard work and not an artifact of, say, birth or luck. Or, as Kraus and Tan put it, the finding may reflect a hope that “elevated positions in society are achieved fairly by individuals.”

Clearly there is at least something to this: Plenty of research confirms that everyone likes to attribute their successes in life to their own virtues, and their disappointments to misfortune.  Only at the end of the article does it float the possibility that the causality may, at least in part, run in the other direction: That believing it’s a matter of luck how one fares in life may lead one to do less well, while believing (even somewhat unrealistically) that your fate is in your own hands is a prerequisite for having the motivation to do as well as you can. Perhaps—and there’s a whiff of paradox here—a belief in that kind of personal responsibility for outcomes is one of the lucky advantages that affluent parents pass on to their children.