Archive for April, 2010
Two thoughts on Peterson Fiscal Summit
Today, I attended the Peterson Foundation’s star/wonk-studded Fiscal Summit. Speakers included Pres. Clinton, Alan Greenspan, Robert Rubin, Peter Orzag, Paul Ryan and more. Great coverage at the Fiscal Times. Two thoughts.
First, Paul Ryan continues to impress and he commanded an out-sized influence on the days events. Ryan’s observation that the fiscal crisis is the most “predictable economic crisis” in history, was the quote and idea that kicked off the proceedings. Though outnumbered, Ryan managed to draw the key ideological distinctions on his panel about the roll and purpose of government. And during the luncheon address, Peter Orzag continued to call attention to Ryan’s ideas. If Ryan can command this much attention–in a room full of politicos that includes President Clinton!–just imagine how much attention other Republicans could get if they too started talking as candidly and forthrightly about ideas.
Second, I was struck about how elliptical the whole panel on health care reform sounded. Dr. Elliot Fischer at Dartmouth described how various new business models have innovated to reduce costs and increase quality care. And all the other panelists agreed, saying yeah, we should reward that by giving a bonus payment, or tinkering with the Medicare reimbursement formula, or empowering the government “innovation center” to do more of this. But isn’t this missing the surprising thing about these examples? Because in every other sector, you don’t need a politician to pass a bill or tweak a payment formula to reward such innovation. If it’s good for consumers, you make a profit and grow on your own. Why isn’t this true for health care sector? No one seemed to see this as odd. But it’s more obvious why if you read David Goldhill’s piece in The Atlantic. And, the analysis points towards a much different path for reform.
Overall, an impressive day of speakers and I hope an encouraging sign of momentum for the Commission.
The flip side of tolerance
As I had noted before, TargetPoint and Politico had commissioned a poll of attendees to a DC Tea Party rally, including questions to separate libertarians from conservatives. Alex Lundry has been blogging new bits of analysis the last week. I found this observation particularly interesting:
However, while [Ron] Paul does not perform well among traditional values promoters, Palin does perform decently among the more libertarian group, indicating some potential crossover appeal between the two camps of the Tea Party. Beyond that, Gingrich and Romney perform adequately enough in both groups that they too have potential to be a bridge between the libertarian and socially conservative sects of the Tea Party.
So it seems libertarians can live with conservative politicians, while conservatives have a harder time living with libertarian politicians. Is this the flip side of the social tolerance that differentiates libertarians from conservatives? Perhaps. And I wonder if this helps explain why the historical alliance between libertarians and conservatives has often favored conservative politicians.
Productivity, consumption, and leisure
Tyler Cowen links to Matt Yglesias writing about the future of capitalism and social democracy. Yglesias writes:
When I was in Finland, where they have quite a mild right-wing, the thing that the conservative politician I spoke to seemed really upset about was the idea that Finnish kids are spending too much time in university. Too many students in college! Too many of them getting master’s degrees! Sometimes people would even take time off from their studies to travel! Here in the United States a huge swathe of the pundit class seems to deem it outrageous that the Social Security retirement age hasn’t increased as rapidly as average life expectancy. Don’t people know that they were put on this planet to work! How dare we, as a society, take some of our increased productivity in the form of an increased measure of liberation from our employers rather than more material possessions? The public, sensibly, doesn’t see it that way. When life expectancy grows faster than the retirement age, humanity is making progress.
Insert gratuitous Monty Python reference here. (Sorry, I couldn’t resist.)
I can’t imagine any defender of capitalism and markets, except those of a strangely Puritanical variety, who name their children Cotton and Jereboam, actually holding the views that Matt seems to ascribe to defenders of laissez faire. This is straw man burning of the silliest order.
Nobody argues that it’s at all wrong to “take some of our increased productivity in the form of an increased measure of liberation from our employers rather than more material possessions.” Indeed, that is exactly why productivity gains matter in the first place. What we cannot do justly is take the productivity gains of other people (specifically, those younger than us) and channel them into our own liberation.
The reason that productivity growth — which capitalism achieves — is so important is that it allows for a greater basket of consumption. From an economic point of view, leisure is a form of consumption, whether taken in the form of a shorter work week, longer retirement, later age of beginning work, or shorter working hours. Productivity growth in an of itself is not a goal; the goal is to do more with less. That’s the essence of economics, the study of scarcity.
Liberalism allows us choice about whether we wish to channel marginal productivity gains into taking more leisure time or consuming more. If my productivity increases by 25%, I can either take Fridays off and maintain the same level of consumption, or keep my working hours the same and enjoy 25% more consumption. (And of course, I can do something in the middle.) Nobody argues that a five-year uptick in life expectancy means we should work five years longer. The relevant question is one on the margin, which Matt misses altogether.
The problem that I and many others have with the way that American entitlement programs are run is that the math doesn’t work out. It’s noble to save for retirement. Many people choose to work extremely hard for 25 years, living frugally, and squirrel enough money away to retire at 50. That’s their prerogative. What is not their prerogative is what is currently being demanded of Social Security: for inputs to remain more or less the same today and have outputs increase tomorrow. That’s about intergenerational wealth transfers, not increased worker productivity. (And lest we forget, wealth is a stock while income is a flow. A transfer of a stock is not the same as a flow.)
What proponents of raising the Social Security retirement age to, say, 67 are saying is this: Your retirement is going to be about 15 years longer than your parents’, so you should probably work 2 years longer to pay for it. That’s still a 13 year marginal increase in the length of retirement. Which is something brought about by productivity gains, which are notably lacking in the social democratic countries of Europe.
David Brooks misreads the “center”
David Brooks laments the rise of the “libertarian/Goldwater-esque” streak of the Republican Party and the re-emergence of what he describes as the “government war,” the “stale” debate over “big government-versus-small government.”
To each his own, I guess.
But what I find interesting is Brooks’ historical narrative of where this libertarian streak comes from. The story begins with Obama. By his reading, there was a glimmer of hope for centrists like Brooks, with Obama and his band of “brilliant pragmatists.” But the financial crisis and Obama’s attempt to push too many big-projects too fast, soured the countries’ centrist mood. And now, “politics is more polarized than ever.”
I think this story misses the mark on two counts. First, the story doesn’t start in the right place. As David Boaz and I have shown, this libertarian streak began with Bush. As early as 2004, polls detected the dissatisfaction of small-government libertarians towards the Bush administration’s more big-government policies. This libertarian-inspired anger has been growing and gathering since. Libertarians have led the way.
Second, I don’t think calling this sort of politics “polarized” accurately captures it. Brooks writes, “The Democrats have become the government party and the Republicans are the small government party.” True, this libertarian streak is mad at Obama and the Democrats. But it’s not really a polarized, red-team, blue-team thing. Polls show that these libertarian-inspired voters are just as mad at Republicans. If Republicans are indeed the small government party, they certainly haven’t sold many voters.
Perhaps in recent history, libertarians occupy the “center” of American politics–though certainly drawn on a different map than Brooks imagines.
Rand Paul Money Bomb
Supporters of Rand Paul, Ron Paul’s son and a candidate for US Senate in Kentucky, are organizing a money bomb today. A money bomb is simple: get a large number of donors to make small or medium donations over the course of a few hours. The theory behind money bombs is that they generate large fundraising in a short time period, which generates news coverage, which in turn generates more fundraising.
I’d give even odds that Frank Rich will suggest that the use of the word “bomb” means that Paul’s supporters are violent, anti-government types whose money bombs are likely to become IEDs in the near future. [Addendum: I'll concede that organizing this event on the 15th anniversary of the Oklahoma City Bombing is a bit tone deaf on the campaign's part.]
In more serious news, co-blogger David Kirby has an excellent analysis in today’s Politico with Cato Institute veep David Boaz about libertarian beliefs and the Tea Party crowd.
Tea Party split 43% conservative to 42% libertarian
Fascinating new poll out today from Politico & TargetPoint. For the first time, researchers have measured the two camps of the Tea Party ideologically, conservative versus libertarian. Interestingly, Tea Party supporters are split down the middle:
Indeed, combining the responses to some of these questions is a revealing ideological exercise: 43% of attendees said government is doing too much AND that government should promote traditional values, a distinctly conservative view; 42% said government is doing too much AND that government should NOT promote any particular set of values, an ideological view used by the Cato Institute as an indicator of libertarianism (currently 23% of all Americans fit into this category).
Also at Politco today, Boaz and I explore where these libertarians come from. We see the origins of this shift as early as the Obama election, when libertarians swung away from Obama and the Democrats after supporting them in greater percentages in 2004 and 2006. This 2008 swing seems to be an early indicator of the libertarian-inspired anger of the Tea Party that Alex Lundry and his colleagues at TargetPoint are finding today.
UPDATE: Dave Weigel points out some potential biases in the TargetPoint / Politico poll, since they surveyed only DC Tea Party attendees. Nonetheless, this is the first data point on ideological breakdown of Tea Party and an important finding for other pollsters and researchers to verify nationally.
On Irony
Earlier this evening I tweeted “Glee version of Rock Bank or Guitar Hero would be over 9000 kinds of awesome.”
Very soon thereafter, I got two responses from friends. One said “Gasp! I need that. Brilliance.” The other said, “Please tell me you’re joking, Dan,” to which I responded, “Not in the slightest. But in fairness I don’t know the difference between what I like for real and what I like ironically.”
I was serious in my response to the second tweet. The line between sincerity and irony, at least for a certain segment of the Gen X and Gen Y set (read: hipsters and fellow travelers), has more or less disappeared. In 2001, Roger Rosenblatt of Time famously suggested that the 9/11 attacks spelled the death of irony. Chalk that up to the worst facepalm epic pundit fail since Clifford Stoll’s recently reunearthed 1995 pronouncement that the Internet was basically a bunch of hype. Irony is alive and well, and thank goodness.
I have been remarking for years that I no longer distinguish between that which I do sincerely and that which I do ironically. And I’ve decided that’s a good thing.
Fox’s Glee, to stay with the current example, doesn’t know whether it’s sincere or ironic. The show is so good because on one level it echoes life and a classic high school narrative, but on another level it drips with self-awareness and ridiculous plot twists, like the discovery that the school principal previously starred in an Air India safety video. It is neither straight nor comedic, it’s somewhere in the middle, and it veers rapidly between the two poles.
Because I have broken down the wall between sincere me and ironic me, I can like shows like Glee — which is silly, predictable, and as camp as a row of tents — and silly Europop and 80′s power ballads — without secreting them away as what we previously would have called “guilty pleasures.” The same goes for 30 Rock, another show conceived and executed with a Jimmy Fallon-esque degree of self-awareness. And my two Twitter respondents can think I like the show either ironically or sincerely, depending on how they choose to interpret it.
The result is an increased freedom to like what we want, regardless of social norms or fads — and an increased willingness to share our tastes with the world. The shield of irony allows us to expose our real likes and dislikes; people who question our tastes can write it off as irony. What’s fun is fun, whether it’s trendy or culturally significant or otherwise. The irony shield allows us to embrace anything and everything that we find fun, other people’s opinions be damned.
I close with the greatest definition of irony every given, not from Alanis Morisette, but from Baldrick.
Libertarian sentiment has finally gone mainstream
Or so says Chris Stirewalt, political editor of the Washington Examiner:
Three years ago, the Republican establishment piled scorn on the presidential candidacy of Ron Paul. Today, he is in a statistical tie with President Obama in 2012 polling… Paul will not likely be the next president… But there’s no doubt that hating the government and the powerful interests that pull Washington’s strings has gone from the radical precincts of the Right and Left to the mainstream.
Microloansharking
The New York Times home page is carrying a story this evening about how banks and financial institutions are entering the microloan business and — gasp! — giving loans to poor people in poor countries. But there’s a catch:
But the phenomenon has grown so popular that some of its biggest proponents are now wringing their hands over the direction it has taken. Drawn by the prospect of hefty profits from even the smallest of loans, a raft of banks and financial institutions now dominate the field, with some charging interest rates of 100 percent or more from their impoverished customers.
Without giving much in the way of details, other than dropping the name of Deutsche Bank, and some interest rates that appear high (though no comparison is given to what loan shark or grey-market credit rates are), the Times suggests that this once good-hearted enterprise is now falling drip to the tentacles of capitalism.
Folks, this is a feature and not a bug. One of the longstanding criticisms of microlending is that it isn’t scalable. If you or your foundation lend a few hundred dollars to a group of women weaving baskets in Bangladesh, and they grow their business, we all pat you on the back. But what’s the next step? What if this group wants to expand further, or move into related enterprises? How does microlending help them? Answer: it doesn’t.
The only way that microlending works to really help poor countries become rich is if it serves as a bridge to the formal financial sector, so that a $100 loan today becomes a $1,000 loan next year and a $10,000 loan the year after that. That’s growth. That’s enterprise. That’s meaningful poverty alleviation through capitalism. And that’s not something that the charitable microlending sector can accomplish, any more than charity can help me get a mortgage or a car loan.
We should be applauding international financial institutions, with access to trillions of dollars or capital, who get into the microlending business. That’s the only way this process works in any meaningful sense. Otherwise, all we’re doing is marginally expanding arts and crafts enterprises and leaving the poor dependent upon the charity of wealthy nations. That’s not meaningful development.
If microlending sharks are charging exorbitant interest rates, then presumably people will get their money elsewhere or choose not to take out loans. But the Times has an answer to that:
But poor borrowers are often too inexperienced and too harried to understand what they are being charged, experts said.
Ah, the poor are too stupid to engage in commercial transactions! They should only be able to get loans through well-meaning charities! Your new-caught, sullen peoples cannot be trusted in the worlds of contracts and commerce!
Perhaps — just perhaps — poor entrepreneurs know what they’re doing and are making decisions that are responsible based on their needs, skills, and goals. And perhaps allowing these people to participate in the international flow of capital and commerce that those of us in rich countries take for granted expands their opportunities and doesn’t make them victims.
The expansion of the international finance community into microlending is a development to be applauded. It means that poor entrepreneurs are increasingly moving into the formal economy, becoming banked, and developing relationships that will open their access to vast amounts of capital.
We should celebrate this, not condemn it.
McCain on Hayworth
This may not actually be an original concept, and it likely is not, but this is the first time I can recall seeing a candidate for a major political office creating a spoof ad for his opponent. The McCain people have put together a pretty funny take on JD Hayworth:
