Archive for January, 2012

“What Won’t He Control?”

When Obama was first elected, I told a friend that he was a fascist—not in the standard Leftist-diatribe sense, where it means “someone I don’t like,” but in the sense of someone who differs from communists in allowing much of the economy to remain in private hands while nevertheless forcing it to conform to government direction. The State of the Union address offered further confirmation of that thesis, if any is needed. Clark Judge nails it:

But let me get this straight: 1) banks will be punished (do I understand this right, by a committee headed by Eric Holder?) if their lending is too risky, 2) and they will be required (by the same committee) to give more home loans (meaning, it must be, to people who would otherwise not qualify for the loans, or else the government would not have to be involved) at lower rates (which means rates that do not compensate them as much as the market says they need to be compensated for the risks they are taking, all of which sounds like a new edition of the policies that brought on the financial collapse), 3) which must mean that they will have to pull back on risky lending someplace other than homes, 4) the only place that most banks would be able to pull back on riskier customers would be loans to small and new businesses, 5) but these are the businesses that have created just about all the jobs over the last 20 years and he said early in the speech he wants to encourage them, 6) so maybe their growth capital will come from selling stock to the kinds of people who invest in new and small businesses, 7) but through the Buffet Rule he’s going to double the tax rate on investment income for those people, meaning that, like the banks, they can’t be fully compensated for the risk of backing small and new businesses, 8) so they will not invest more in small and new companies but in big established firms, 9) so more of those small and new firms will have to turn to the government for capital, 10) which luckily he said would up its investing in early stage businesses with “the best” ideas, 11) “the best” ideas meaning, I guess, as with Solyndra, ideas that advance his agenda through companies whose owners support his candidacy), 11) or maybe it would be companies that agree to invite unionization (since the unions have failed to organize the new and dynamic sectors of the economy, which is why they have been shrinking), 12) but then with the big businesses, he wants to punish American companies if they invest overseas, 13) and he wants to increase exports, 14) but being competitive in the global markets often means having part of your production near your markets, which is why many companies have opened production facilities abroad and many foreign companies (BMW and Honda, for example) have opened their facilities here, 15) so he’ll make these companies less competitive, meaning less able to export anything that might be paired with some other product the company makes abroad in order to attract buyers, 16) and it also means he’ll have the U.S. ignoring many of the international trading rules of which we have been the principal sponsor since the end of WWII, rules that have led to an incredible growth in widely shared wealth all over the planet, 17) which means that, if he follows through, he’ll blow up the post-WWII global economic system, 18) which in the very short run may help the uncompetitive American labor unions but in the not-so-long run would devastate every economy on earth, 19) but it would also mean he would be in a position to decide where big companies could invest, and when, just as he’ll be in control of all new and small businesses, too, 20) meanwhile he is going to tell states and localities what their budget priorities should be, 21) and make them adopt his policies for running their schools, leaving me to wonder, when he’s through, what won’t he control?

I believe that’s what I heard the president advocate last night.  But one term I didn’t hear, maybe I missed it: “The Constitution.”  Then again, wasn’t he suggesting that, in brave times like these, we need to put aside those old rules.  Do I have this straight?

Yes. Exactly. The plan looks incoherent. Megan McArdle doesn’t see the pattern:

There’s no real common thread holding all of these proposals together except what you might call “nostalgianomics”.

But actually its components work together to destroy the private capital markets—raising the capital gains tax rate, even if that reduces revenue, is part of that gambit—and to put all decision-making in government hands. That’s a recipe for fascism; it’s also a recipe for disaster in the medium to long run. It the short run, however, it will generate massive payoffs to Obama’s buddies and favored constituencies.

Richard Fernandez reacts:

Like the President said, it’s too late now. And if it ain’t already, I’ll make darned sure it is.

“The state of our Union is getting stronger. And we’ve come too far to turn back now. As long as I’m President, I will work with anyone in this chamber to build on this momentum. But I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place.”

Translation: I’ve burned the bridges, bet the farm, taken the airplane past the point of no return. Just you watch. Hold my beer. I tell you it’s in here somewhere.

“But I intend to fight obstruction with action.”  Alternative translation: I don’t expect to win the House back even if I win reelection. But I’m not going to let that get in my way; I’m going to impose my will by executive fiat. I intend to disregard Constitutional limits and thus violate my oath of office.



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Mitt Romney’s Tax Returns

What is all the fuss about Mitt’s taxes? If he has made millions of dollars and has paid only 15% in taxes, then he is our guy to be president. Obviously he knows how to manage cash. Just imagine what this could mean to federal spending. Perhaps a balanced budget? Perhaps deficit reduction? This is a tremendous plus in his column.

In addition, I would request that Obama release a lot of documents he has failed to come across with. Medical records, school records, school funding records, the list goes on and on, except for the birth certificate. Tax returns get released as soon as the president opens his records for inspection.

I am not sold on Mitt Romney, but if he is the one running vs Obama, I will vote for him. But that is a really long list. Oh, I won’t vote third party – throwing away your vote, meaning a vote for Obama, if you do.

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Where have all the workers gone?

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Thoughts on Equality

A Facebook friend recently posted something sympathetic with Occupy Wall Street and related concerns about inequality. I commented that inequality seems to me utterly irrelevant. If a wealthy person becomes even more wealthy at my expense, I have reason to be upset. If that person thrives without disadvantaging me, however, I see no reason to complain. In fact, it seems to me I should prefer that situation, since it is Pareto preferable to the original: the wealthy person is better off and I am no worse off.

My friend thought I was joking. I pointed out that I was expressing the same intuition that led John Rawls to his lexicographic ordering principle—there is no reason to object to inequality per se. Injustice for Rawls is an inequality that comes at the expense of the least advantaged. Inequality that does no disadvantage anyone is morally unproblematic. Indeed if it benefits the least advantaged it is morally preferable on grounds on distributive justice. That people on the left no longer accept that intuition—indeed find it unintelligible—says a lot about how the left has shifted in a more extreme direction since the publication of A Theory of Justice 41 years ago.

Several recent articles add important additional dimensions to the issue of inequality.

  • Andy Kessler points to consumption equality. The lifestyles of the rich and famous are in many respects not very different from the lives of the middle class. “For the most part, the wealthy bust their tail, work 60-80 hour weeks building some game-changing product for the mass market, but at the end of the day they can’t enjoy much that the middle class doesn’t also enjoy.”  It’s absolutely true. I have some friends who are multi-millionaires. Their houses are bigger and more impressive than mine. (One is a replica of a Habsburg palace!) But beyond that there isn’t much to differentiate us. We have pretty much the same appliances, consumer goods, etc., at least in functional terms. (My Frigidaire keeps things as cold as their SubZeros.) They have BMWs; I have a 20-year-old Miata. But they all drive well. (In fact, my car is more fun to drive and it’s more reliable. I wouldn’t trade.) I remember noticing consumption equality even when I was a poor graduate student. My wife and I were able to live well on a very modest income. The difference between rich and poor, I learned then, is security, not lifestyle. It’s what you have in the bank—in what you could spend if you had to—not in what you can afford day-to-day. Kessler identifies why: “Just about every product or service that makes our lives better requires a mass market or it’s not economic to bother offering.”
  • Victor Davis Hanson notes the same thing. “I drove down to Los Angeles in my Accord again not long ago. And once more I was amazed at what people pay for comparable rides in imported luxury cars. For some reason, I got stuck on the 99 behind a new BMW for 50 miles. My car is probably now worth $20,000, the other driver’s probably $75,000. We went the same speed. I had heating; so apparently did he. My windshield wipers worked as well. My exhaust was as clean as his.” My car is worth about $2,000, but the same is true of mine. The additional money the BMW driver spends buys something, presumably, but it’s not clear what it is, or why someone without it suffers anything with which morality or public policy ought to be concerned.
  • In other matters, such as education, it’s much the same. Hanson observes that the Classics program at Cal State Fresno compares well to top programs at private universities. Three of the top five philosophy programs are at public universities (Rutgers, Pittsburgh, and Michigan), and UCLA, North Carolina, Arizona, Berkeley, CUNY, and Texas are all in the top twenty. Philosophy majors at any of them are better off than philosophy majors at much more expensive private schools such as Duke, Penn, Johns Hopkins, Northwestern, Dartmouth, Emory, Rice, Williams, Haverford, Swarthmore, Wesleyan, Pomona, and many more. Need-based financial aid makes a first-rate education available to almost anyone. Technology further equalizes opportunities: as Hanson notes, “we live in an unacknowledged age in which a poor man with a laptop who taps into a free signal at Starbucks has more information at his fingertips than did the Regius Professor of Greek at Oxford just forty years ago.”
  • Greg Mankiw points out that differences in income trace, to a substantial degree, to differences in the importance people place on income. “In other words, one reason that people differ in their incomes is that some people care more about having a high income than others. To put it in geekspeak, preferences over pecuniary goods (say, consumption) and nonpecuniary goods (say, leisure) are heterogeneous.” How much would I give—in labor, say, not to prejudice the issue—to have a new BMW rather than a 20-year-old Miata? Nothing at all. How much time would I be willing to spend working if I were able, by so doing, to double my income? Some, but not very much, and that only because I have a daughter still in college. My rich friends work incredibly hard. They don’t have time to blog, write music, play piano and bass guitar, sing Baroque music, homeschool their children, and lots of other things I do or have done. Nor do they have time to explore wide areas of their own fields.
  • As Mankiw notes, that makes the case for redistributive taxation much weaker. There’s an argument for redistribution based on the diminishing marginal utility of money. But it depends crucially on people having the same utility function. Without that assumption the argument goes nowhere.

All of this makes the “1% vs. 99%” discussion of inequality we’ve been hearing, and are about to hear much more of from the Obama campaign, rather ridiculous.

Why, in fact, does it have any resonance at all? Partly, times are tough, and some people like to have someone to blame. Partly, it’s artificial; the left needs class conflict to distract from its abysmal economic record. Partly, I think, it resonates with media types and policy makers who live in New York, Washington, Philadelphia, and Chicago where divides between rich and poor are dramatic and easily discerned. People who live in Raleigh, Charlotte, Austin, or Phoenix see no such divide. The idea that, as John Edwards used to put it, there are “two Americas” looks absurd on its face from most places in the United States.

“The very rich… are different from you and me,” said F. Scott Fitzgerald. Ernest Hemingway is said to have responded, “Yes. They have more money.” That’s a difference, all right. But it arguably matters less now than at any time in history.

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Environmental Parasites

While we’re on the topic of the environment:

  • Here’s a helpful summary of key emails from ClimateGate 2.0. Don’t fall for the line that misconduct revealed by these emails is irrelevant to scientific conclusions. The emails reveal that the source data is a complete mess. No one knows where it came from; no one can trace data points to specific locations; it’s been “corrected” or “adjusted,” i.e. fudged; it reveals gaping holes in the basic methodology of using tree rings as proxies for temperatures; it yields no clear conclusions about climate change, even according to the leading climate change researchers, who admit that at key points their work rests on “guts feelings” rather than science.
  • Richard Fernandez calls environmentalists parasites. That would once have been unfair. It’s not anymore. The meliorists who led the movement at certain stages have been pushed aside by people who are more than willing to shut down the economy to achieve their goals. Indeed shutting down the economy appears to be one of their goals. At the very least it’s a feature rather than a bug from their point of view. The Canadian government is now on to them, perceiving the radical and devastatingly harmful nature of their agenda.
  • Even under perfect conditions—a solar array in Death Valley—the government can’t make solar energy work. Once regulations grow past a certain point, the jungle they constitute is no longer passable. Walter Russell Mead writes: “if the wrangling, process crazed bureaucrats wrestling with the conflicting, nonsensical regulations and requirements issued by various state, local and federal bureaucracies can’t work out reasonable solutions to the relatively simple question involved in a no-brain solar installation in the desert, what chance is there that these same bureaucracies will redesign the American energy grid and take us to the low carbon utopia that always seems just out of reach?”
  • Current environmentalist objectives here in Austin show the state of the movement quite clearly. It ranges from the annoying—the city council is about to ban bags plastic or paper from Austin stores—to the foolishly destructive. There’s a move afoot to shut down the Fayette power plant, which provides a large amount of energy to central Texas at very low cost, because it burns coal. Never mind the fact that the utilities involved (Austin Energy and the Lower Colorado River Authority) just finished installing state-of-the-art scrubbers on the plant which eliminate 95% of its emissions. Never mind the fact that the plant won’t shut down; if Austin wants out, there will be plenty of buyers. Never mind that there’s no obvious replacement for Fayette as a power source. Never mind that any replacement that might be found would cost many times as much, adding about 30% to the average electric user’s bill. It’s insane. There would be no environmental gain whatsoever. The cost would be immense. And it’s fairly likely to happen nonetheless.

Eventually people will wake up to the destructiveness of environmentalism in its current form. By then it may have done so much damage to its host, to use Fernandez’s metaphor, that the economy won’t be able to recover.

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Pittsburgh Pollution Prejudice

Steven Hayward takes apart a Wall Street Journal story about air pollution in Pittsburgh. Thanks. To anyone who knows the city the story is plainly absurd. I have a demonstration hanging on the walls of my living room. Here is an E. O. Goldbeck panoramic photograph of Pittsburgh taken from Mount Washington in 1938. Goldbeck had to stay in the city for a week to get a shot this clear!

Here is a Goldbeck photograph taken from the same spot in 1980:

Today the air is much cleaner than it was then. It’s not hard to take pictures like this one (I took it in 2009):

Small wonder that the Journal story has to try to convince the reader that air pollution is to be taken seriously despite appearances of vast improvement.

In fact, air quality across the country has been improving steadily for decades. As Hayward points out, Pittsburgh is now typical of large cities, having air quality comparable to or better than cities such as Atlanta and significantly better than New York or Silicon Valley. Environmentalists have to go further and further from ordinary perceptions to convince people that conditions require expensive programs, economic sacrifices, and radical lifestyle changes.

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Justice Antonin Scalia once wrote:

There is, of course, a lot of pretense or self-delusion (you can take your choice) in all that pertains to affirmative action.

Those words came to mind this morning when I received an EEO/AA Program Policy Statement from my employer:

The University … is an equal employment opportunity employer. The University does not discriminate or tolerate harassment on any basis prohibited by applicable Federal and/or State law including race, color, religion, sex, national origin, disability, age, citizenship status, Vietnam era or special disabled veteran status in recruitment, employment, promotion, compensation, benefits, or training….

The University … remains committed to seeking the best-qualified person to fill each available position and will reward each employee based on his or her job performance.  As President, I reaffirm our pledge to base decisions on employment and promotion on the principle of equal employment opportunity. In addition, the University will ensure that all personnel actions will be administered without regard to race, color, religion, sex, national origin, disability, age, citizenship status, Vietnam era or special disabled veteran status, sexual orientation, gender identity, or gender expression.

This Equal Employment Opportunity/Affirmative Action policy shall be implemented throughout the University. It is the responsibility of all departments and personnel to ensure the University’s compliance.

To quote Scalia, “This is, quite literally, incredible.” Affirmative action policies give preferences to members of some groups—in a university setting, generally, preferences in favor of blacks, Hispanics, and especially women. But preferences favoring members of some groups invariably disfavor members of others—typically, whites, Asians, Jews, and men. Setting two different standards for hiring, raises, promotion, and the like, and applying one or the other based on race, color, sex, and national origin certainly sounds like discrimination.

Advocates point out that the bar hasn’t been raised for the disfavored groups; it’s simply been lowered for others. In some sense that’s true. Given that budgets are finite, however, the response is specious. A position that goes to a minority group member doesn’t go to someone else. Higher raises for women inevitably mean lower raises for men. Advocates again try to make it appear that this isn’t so; they set aside special positions for “targets of opportunity”—as a former colleague once said, “Why are minorities always targets?”—and special raise pools for special groups. But surely no one would find similar practices acceptable in reverse. “You’re free to compete for positions here on an equal basis. Of course, we’ve set aside certain positions for whites only.” No one would think that makes an employer immune from charges of racism.

I don’t mean to pick on my own employer here. Similar statements are made throughout the United States by organizations of all kinds. They’re legally required. And people have to pretend they make sense. But they’re blatantly self-contradictory.

Their contradictory nature doesn’t prevent them from communicating a policy: You mustn’t discriminate, except, of course, in favor of certain preferred groups. Even then you mustn’t be too obvious about it.

What counts as obvious nevertheless varies. Publish or perish? I know of a number of minority group members who have been tenured at major research universities without a single published article in their academic fields. Raises? About once a decade my university performs a “gender equity study” that finds women underpaid relative to men. Large raises suddenly go to all female faculty members. The study never takes into account data that might be relevant—things like publications, citations, teaching evaluations, and all the other things departments review when assigning raises—nor does it consider differences among academic fields. Again, no one would find these actions acceptable in reverse.

The policies are supposedly temporary. But they’ve been in place for more than forty years and show no sign of going away. Indeed, there is now an entire cohort of people whose professional positions and advancement have depended on these programs. There is also a cohort of people in personnel offices and legal departments whose positions consist in administering them. It’s hard to see how the pretense or self-delusion will ever end.

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