Arggh!!!! How Hard is it to Look Up Facts People?!?!

I try to read news from both sides. But sometimes I get a little explosion of frustration over the unexamined assumptions that pass for conventional wisdom. Today's discontent comes from reading the National Review, particularly this piece of drivel from Thomas Sowell.

I've covered at some length the fact that there is no evidence that government assistance creates dependency. If anything, the evidence is that state supports, by increasing the rewards from work, increase employment and activity in the market sector (not surprising, since people respond more strongly to losing what they have than loss of potential gains, providing a floor, and thus something to lose, then increasing upside gains is more likely to be successful given people's psychological responses than trying to beat them until morale improves since people at rock bottom tend to just grow resigned and stay there, despite popular movie stories to the contrary).

But, there is a linked idea that receiving government handouts increase voting for the Democrats. However, a quick search for ungated papers on the subject reveals that receipt of means tested benefits (if an explanation is necessary, aid targeted at the poor rather than middle class) decreases civic participation and voting. Since assistance targeted at the poor has a stigmatizing effect, it would be a rather boneheaded move to target programs towards the poor if the goal was electoral success. While one is free to take this as another problem with the welfare state, it does contradict the idea that hand outs to the poor are meant to secure electoral success.

Sorry, but there must be another explanation.

Stark Choices vs. Real Choices

Reading over this Economist piece on how inscrutable Romney's real views are and how his stated ideas have transformed since he was Governor of Massachusetts has made me reflect on how we're not having a real discussion of the problems facing this country (while this article inspired these thoughts, the rest of this post doesn't draw from the article much). Basically, I see the GOP mostly denying the inevitability of various challenges and the Democratic party's proposals showing the sloppiness that comes from their ideas not having any competing ideas that address the underlying challenge.

This is most obvious with climate change. The science is growing increasingly undeniable yet our political system refuses to grapple with it. The GOP largely denies that we should take action, while Democratic ideas are not exactly inspired.

But why should they be? Those ideas aren't going through the kind of competitive process that results in good ideas, instead all we have is two partisan sides shouting at each other about the reality of the problem, rather than about how we can address it. The big problem here is that there are many different approaches we could be taking, there is more than enough room for two parties to distinguish themselves from each other by proposing competing solutions. It is frustrating that we're not having this discussion.

The next major point is on how to deal with the inevitable growth of the state that comes with a shifting dependency ratio. I phrase the growing spending this way intentionally, there is no plausible way the state will not grow with shifting demographics.* The GOP mission to shrink the size of the state is denialism at its worst. This is unfortunate, our shifting demographics are going to put great strain on our political institutions, our economy, and on our communities. How we deal with this shift will play a significant part in deciding how economically successful our country is, how we can maintain our international leadership, and what kind of society we want to live in. Buck passing, by simply shifting responsibility to the states or community organizations through vouchers that don't keep up with inflation is just a way of ignoring an inconvenient reality. We need to accept the inevitability of the fiscal shift, though acknowledging this shift is potentially transient as demographics shift again in 20-30 years, then get on with the hard work of deciding how we want to deal with this as a nation. I find weak proposals on one side and outright denialism on the other a rather poor way forward.

The last is that taxes have to rise. This is separate from the size of the state since taxes have to rise even if expenditure is cut. There is a really good debate to be had here over which taxes will rise how much and how they will be distributed. But that is not the debate we're having. Both sides want to cut taxes, for only most people on the left vs. everyone on the right, but this is just fantasy. In this case both sides are in denialism, but the simple arithmetic says there is a conversation here we're going to have to have even though nobody wants to have it.

At the end of this little piece I find myself thinking that politics should be a lot more like an uncomfortable family conversation around the dinner table than it is now.

*I am exaggerating only slightly. Canada and Australia will likely be able maintain the size of their state at roughly the size of ours without radical changes (Japan likely will as well, but its economic challenges don't make it a very appealing model). The key difference here is lower military spending, state spending likely only has to increase a few percent to be sustainable, it would be possible to shrink the American security state (not just military but domestic security, such as the prison system, as well) to pay for inevitable increases in social spending thus keeping overall expenditure near current levels (I expect Canada's and Australia's to increase, but their model is more successful at controlling health care costs and other social expenditures than our system, and Australia has lower spending than we do, though social expenditure is higher in both). I find this scenario rather more implausible than I find the scenario of a small growth in total state expenditure.

Burning Down Some Straw Men Curtosy of Jonah Goldberg

So I saw this piece of idiocy that somehow trended to the top of the Washington Post's most popular the other day. I probably shouldn't spend my time on Jonah Goldberg, but I think I can use it as a springboard to bring up some interesting topics. On the main point, that liberals also have an ideology, there is some truth to this. But he overstates it, there is a real difference between people who update their beliefs to fit the facts and those that let their ideology come first (basically the difference between medieval scholasticism, which saw its purpose as discovering evidence of known truths in the natural world, and the modern scientific method, which seeks to use evidence of the natural world to discover what can be known and understood). The test is not whether or not an individual has a pre-existing ideological basis for our thoughts, we all do, but whether we can update that ideology for new evidence.

But I got distracted. His first cliche is diversity is strength. He makes a good point about how diversity can erode social trust. However, diversity can also foster new ideas and approaches. A colleague recently remarked to me how much the diverse viewpoints and backgrounds enhances our ability to get our job done and interact successfully with differing clients. He contrasted this with the false and pointless diversity stereotyped in the media.

This I find very true. The point of diversity isn't to provide "extra help because of the horrible legacy of slavery and institutionalized racism" (though there is a lot of evidence that institutionalized racism remains prevalent in the US), it is because different perspectives can reveal problems and propose solutions that would not be revealed by a uniform perspective. Admittedly, race is an imperfect proxy for this, but it is a readily identifiable one that tends to be substantially correlated with having a different background and upbringing, and thus often perspective, from the individuals that tend to make up the majority of firm management or classroom students. Of course, this advantage can also be eliminated by hiring managers who choose to select for members of a race most like themselves in upbringing and viewpoint to meet quotas, there is no institutional solution to human stupidity and obstinacy. I'm sceptical of anti-diversity "color-blind" arguments because they almost invariably elide into a selection process that would select on universality of background, and often perspective, whatever the skin color of the person under consideration. Which just shows these arguments entirely miss the point (I should mention that more than a few people have proposed that men such as Socrates would have been influenced by the diverse individuals that they encountered in the Athenian forum, race provides a good proxy for diversity in America, in other cultures other traits would be correlated with diversity of belief and perspective).

Budget Committee Inequality Report: Taxes

 Paul Ryan makes a number of claims about the tax system, below I quote his major points:

The 1986 tax reform, by cutting top rates and broadening the base, caused the average federal income tax rate paid by the top 1 percent to go up; average federal income tax rates for the bottom 80 percent to fall; and the burden of the federal income tax to shift from the bottom 80 percent to the top 20 percent, especially the top 1 percent. At the same time, the incentive effects of lower rates produced a rise in taxable income and an increase in federal income tax revenues.

The results of this successful reform illustrate the folly of looking only at what is happening to tax rates when analyzing the distributional effects of pro-growth tax policy. Lowering tax rates while eliminating shelters that are overwhelmingly used by upper-income taxpayers results in a more progressive federal income tax overall, while creating the kind of economic growth that allows all income groups to prosper while incidentally bringing in more revenue to the government.

 I have a few issues with this story. First of all tax reform didn't involve just income taxes, it impacted all Federal taxes. The appropriate dataset to look at isn't income taxes alone, it's all Federal taxes. Looking at all Federal taxes reveals a rather different story from that Ryan is telling.

The chart below is reproduced from Piketty and Saez, "How Progressive is the U.S. Federal Tax System? A Historical and International Perspective," using average Federal taxes (including income, payroll, estate, and corporate).

Income Groups 1960 1970 1980 1990 2000 2004

Full Population 21.4  23.3  26.6  25.8  27.4  23.4
P20-40              13.9  18.5  16.3  16.2  13.1    9.4
P40-60              15.9  20.2  21.4  21.0  20.0  16.1
P60-80              16.7  20.7  24.5  24.3  23.9  20.5
P80-90              17.4  20.5  26.7  26.2  26.4  22.7
P90-95              18.7  21.4  27.9  27.9  28.7  24.9
P95-99              23.5  25.6  31.0  28.6  31.1  27.2
P99-99.5           34.0  36.1  37.6  31.5  35.7  31.3
P99.5-99.9        41.4  44.6  43.0  33.0  38.4  33.0
P99.9-99.99      55.3  59.1  51.0  34.3  40.2  34.1
P99.99-100       71.4  74.6  59.3  35.4  40.8  34.7

Pay and Elite Justifying Myth

Has anyone noticed that whenever progressive taxes are mentioned the moral right to that income is justified as being the amount produced but whenever low incomes are mentioned the value of each worker's production is considered irrelevant and instead the prevailing wage determined by the labor market justifies it?

This creates a frame where the rich are irreplaceable while those that aren't are simply commodities. But is there any good reason why we should look at things this way? The wage of those that aren't rich is considered just because it is where the wage demand of the marginal laborer lies. But why should this be any different for a CEO? Why is it just to pay him based on production rather than the marginal wage for the nearest equivalent individual to replace that CEO? Is there any truly good reason to believe the CEO is truly worth what they are paid relative to the next equivalent individual or do we simply have a cultural bias that causes us to look at employee's differently based on status. Elite workers get paid on production, whatever their value relative to the marginal individual that could replace them, the rest accept a wage determined by the market.

Budget Committee Inequality Report: Welfare Reform

Ryan states in his report that:

According to the CBO’s study, one contributing factor to the declining share of transfer payments going to lower-income households was the decline in spending on Aid to Families with Dependent Children and its successor, Temporary Assistance for Needy Families, relative to market income. These relative declines occurred as a result of bipartisan efforts in the late 1990s to transform cash welfare by encouraging work, limiting the duration of benefits, and giving states more control over the money being spent.

At the time, opponents of these reforms charged that the reform effort would cause large increases in poverty and despair. Instead, the exact opposite occurred. These reforms cut welfare caseloads in half against a backdrop of falling poverty rates, falling child poverty rates, low unemployment, and rising income for the lowest quintile. In fact, over the period studied by the CBO, the lowest quintile’s income gains were most pronounced after the passage of the 1996 welfare reform law (see Figure 1 on page 2).

As a result of methodology limitations in the CBO’s study, this successful welfare reform effort appears to have reduced government’s role in making the distribution of income more equal, but it does not follow that welfare reform caused income inequality to get worse. In many cases, welfare checks were replaced by paychecks. The CBO report states that its analysis does not account for the incentive effects of changes to taxes or transfer programs. In the case of welfare, that means that the analysis does not account for the sea change in the incentive structure of the program that led large numbers of welfare recipients to escape the grip of government dependence in favor of gainful employment and independence.

 He goes on to state:

Creation of new means-tested entitlements/tax credits: Also, as the CBO’s study notes, the decline in transfer payments to low-income families with children was largely offset by increased spending on other means-tested programs and tax credits. In the late 1990s and early 2000s, Congress created a number of new means-tested entitlements (such as the State Children’s Health Insurance Program) and tax credits (such as the Earned Income Tax Credit, or EITC, and the Child Tax Credit, or CTC) that raised the after-tax income of lower-income households.

The EITC and the CTC are refundable credits, meaning that if a taxpayer’s credit exceeds his or her tax liability, he or she receives the balance of the credit in the form of a payment. The CBO notes that an increase in the refundable portion of these credits largely took the place of cash welfare spending, as government income-support programs migrated to the tax code and became tied to work status.

The increase in these credits was also partially responsible for the observed increase in the progressivity of the federal income tax over the period studied. The CBO study noted that “The lowest income quintile has a negative average federal tax rate because, as a group, households in that quintile qualify for more in refundable tax credits than they owe in income taxes before the credits are applied.”

Class, Resentment, and Means Testing

Reading over Ryan's Budget and Inequality reports have led me to reflect on a rather large number of things. To break out one particular issue that is recurrent in these reports is Ryan's insistence on trying to limit our welfare state to only those that really need it.

This idea is laudable at first glace, but this falls into one of those policies that I contend are bad because they lead to the formation of economic class and class resentment.  I'll use myself as an example to explain.

When I decided that I wanted to get my Master's degree, I decided to change my whole life around to get it. I left Canada so I could move back in with my parents. I got a really boring job I hated and worked at it for a year to save. I went home for one summer to save more money.

I then decided to look into what programs were out there to help me pay for it. While I had saved and was working enough to get by it really involved me pinching pennies. I found that I qualified for enough subsidized loans that I could live decently while in school.

However, I also found out that there were some grants I didn't qualify for because I had been so responsible. If I hadn't saved for a year I would have had less income and qualified for some assistance as a result of that. If I hadn't moved home, but had instead got my own place (which would have been far preferable for any young 20 something), I would have received even more grants, but the very fact I lived at home qualified me as a dependent in the eyes of New York State and disqualified me for a great deal of assistance.

My initial reaction was a great deal of resentment. Here I was, doing everything right, but if I had done everything wrong I would have received all kinds of free money. How unfair everything seemed. Why is the state rewarding bozos who do everything wrong while responsible people like me have to work so hard and don't get anything?

Years later, what I've realized is that the state would have been wasting money on me. Rather obviously, I was going to get that degree no matter what. It would require more tax dollars to pay for a degree that I was going to get anyway.  However, for a poorer individual, who didn't have family to move in with and perhaps needed to go directly to school to get away from a crowd back home that was bad for them, that money mattered a great deal. The system is set up the way it is to try to help the marginal student that needed the help to get a degree, raise their human capital, and likely pay back far more then they received in benefits to society at large (not that it is set up very well to do this, but that is separate issue), while saving money by denying assistance to people who are already doing everything right without the help. So far, so good.

The problem, of course, is that resentment I felt. Not every student denied public assistance goes on and gets a political science degree and changes their political beliefs in response to having greater knowledge (when I went in to school I was a staunch conservative, I actually favored Giuliani for awhile, but as I read more and learned more about American politics (my history and foreign knowledge were better, but I was pretty pig ignorant and tribal when it came to American politics at that point in time) my political beliefs shifted a great deal, I always took pragmatism and empirical evidence seriously, and like the author of Do-Gooders, I associated that with Conservatives at the time). Many more are going to remember that resentment they felt when they looked for assistance and couldn't get it and let that influence their political beliefs and actions well beyond the brief point in time they needed it. They'll continue to feel like the government unfairly discriminates against them and in favor of losers unwilling to put in the work and make the sacrifices that they made to get where they are. They won't think through it to realize that what the programs are set up to do is to try and get people to get a degree who wouldn't normally do so, not to give a handout to someone that was going to do it anyway.

And this sort of emotional response is basically what people will have regarding virtually every means tested program. They'll encounter programs that don't work for people that tried to save, programs that won't help people that get injured or disabled and try to work anyway, and programs that don't work for people that work hard but can't seem to quite make ends meet. The programs will reward those that have thought ahead and tried to manipulate it (Medicaid look back and nursing home costs) rather than those that follow the rules in good faith and don't try to move money around to game the system. They'll be stuck with the roommate with a free ride whose a recovering drug addict, walking out of the disability office after being denied while seeing a smelly derelict get it, and praying not to get sick while they're without health insurance while seeing the destitute homeless man surrounded by paramedics because he passed out in a bus shelter.

This is an example of what I mean by how poorly designed programs create class. On a personal level, I've felt the resentment that right wing demagogues try to exploit. I'm not proud of it, but I see on a visceral level the kind of buttons they're trying to push, I have them too. I understand why our programs are the way they are, it saves money this way by not providing responsible people with incentives to do what they're going to do anyway and instead focusing on people who were dealt a bad hand or screwed up badly.

But this also means that anyone who has tried to do everything right will see an unresponsive system whenever they need it. They'll be forced to spend down their hard earned savings to get assistance, meaning that they'll often be trapped in poverty by the time they qualify. When assistance could have changed things they didn't get it, when they do get it they feel it is too late because they're already discouraged and without hope, they feel nothing but resentment at the government by this point.

This is why I have a big problem with Ryan's solutions. He likes to decry class-based thinking, but it seems to me the programs he prefers cause it, not fix it. The small government he wants appears to me custom designed to create dependency, while the larger government he blames for it seems able to create problems that won't have the kind of dependency producing problems that result from means testing. I understand the emotional appeal of what Ryan is suggesting, but reflecting on my own emotional responses and what I've learned about the actual impacts of government programs lead me to believe that Ryan's favored methods are the cause of, and not solution to, the problems he wants to deal with. Perversity is a favorite claims of reactionaries, but I believe the data points in the direction that their own favored policies are the ones with perverse effects, and I think emotional responses such as my own explain why this is.

Budget Committee Inequality Report: Relative Inequality vs. Well Being

I'm going go through the rest of this report section by section.

This section is mostly an attempt to change the conversation. The problem with inequality is that there is a feeling that people are becoming increasingly unable to compete with the elite. The problem is that the price of goods being bought is diverging. Ryan tries to make it sound like it is absolute gains that are the problem and that the diverging costs mitigate it. But the reason that people are feeling pressured is that it is becoming ever harder to buy a house that will get one's children into a good school system, to get kids engaged in enough activities to get into top schools (how many parents try to send their kids on study abroad to get into a good college? how many feel they can't compete because they can't afford to do this?), and that the uncertainty of retirement and health care means that it is impossible to take any risks, even if there is a chance they might pay off.

Ryan's attempt to change the conversation to absolute well being just shows how out of touch he is. Movements like Occupy Wall Street, and the general chatter that comes up on blogs and the news, are attempting to send a message to our lawmakers about social anxiety. The fact that the family now has a Playstation doesn't make up for the fact that they now feel they are locked out of competition for better social position. This doesn't show up in income quintiles, it impacts someone in the 91st percentile as much as it does someone in the 9th. The problem is that there is a feeling, a feeling backed up by much of the data, that it is increasingly hard for two people of equal abilities to compete with each other for limited spots, such as in college admissions or for good jobs.

How is a poorer family with a equally good test scores supposed to compete with another when the richer family can send their kid to learn French in France for a study abroad, their kid has to work at McDonalds while the richer kid can spend their time in volunteer work and unpaid internships, and the richer kid can get into better schools before university? However unequal things may have been in reality before, the trend towards looking at extracurricular activities, as opposed to standardized tests and grades, has given everyone an increasing sense that money plays a greater role in determining life chances than ever. How can the kid that has to work to help maintain his family hope to compete with someone that doesn't and can focus into getting into a good college? How can someone that has to work a second job to make ends meet find the time to go to college to get skills? How can someone with a family to support take the risk of giving up health insurance to start a business and become an entrepreneur?

These questions are why inequality matters, it has nothing to do with how many Xboxs a family now has. All of Ryan's discussion just shows he doesn't get it, the problem is that people feel locked out of the elite in a way they didn't 40 years ago, the divergence in costs between the goods purchased by lower income households and the goods purchased by upper income households is one of the causes of the increasing salience of inequality, not something that mitigates its problems.

The rest of the section doesn't deserve much discussion. No one is disputing that some portion of the increase in inequality is due to structural changes such as increased awards to skills and technology. These changes are global in nature. However, the change in inequality regarding the one percent and the rest is pretty much unique to America and the easiest explanations all involve political changes in our economic structure and an increasing ability of existing elites to exclude those that are not like them and don't buy into their self-serving ideology (more on this another time). It is the portion not explained by international trends which is of interest to those discussing inequality, not the part of it that is.

More on the Budget Committee's Report on Inequality

The release of Ryan's new budget plan has turned my attention again to his work. As I've said before, I find his statements ill-researched, divisive, and generally irresponsible. Ryan is constantly trying to frame things as a divide between two polarized camps, which I don't see as all. Most major policy issues involve several bills proposed in Congress, not two opposing visions. Aside from this, there are hundreds, if not thousands, of alternatives that never reached this level. To some degree this is standard partisan politics, but I'd like to suggest comparing Ryan's Path to Prosperity with the 2007 House Budget Committee's statement. They're not entirely comparable since the 2007 report is simply criticizing the President's budget proposal but they're on generally the same topic. They also show some surprising comparability, such as in criticism of deficits. I don't think the 2007 report is fair, but I think contrasting it with Ryan's shows the difference between typical partisan mudslinging and why I think Ryan goes over the top.

Before getting to his budget proposal, I'm going to finish going through his paper on inequality. This brings out more clearly some major issues that I think evidence for his proposals is severely lacking and where his policies would be ruinous. For a refresher the previous posts on Ryan's report are linked below:
Part 1
Part 2
Part 3
Part 4

Class and the Republican Primaries

I am, fascinated, for lack of a better word, with the hostility I am seeing in many news reports on Santorum when compared to Romney in my usual news sources (currently primarily the Economist and the Washington Post).

The major issue I have in mind is the tendency to dismiss Santorum's appeal as based on social issues while Romney is all about the economy.

The thing is I'm not sure this comparison can be so tightly drawn.  Both seem to share a belief that success is primarily the result of individual effort and merit and that the market is the best way to reward hard work and ability. Both seem to share a scepticism that government can improve upon market outcomes and share a belief that government interference leads to inequality, unfair outcomes, and rewarding the undeserving at the expense of the deserving.  Both feel that the influence of the Federal government has involved a transition away from a traditional American emphasis on individualism and hard work.

These beliefs ultimately involve an interaction of social and economic beliefs.  They also lead to some shared policy preferences, primarily towards low taxes and economic regulations. Both seem to share a belief that lower taxes on employers will help businesses create more jobs.

But here the class* based differences of their supporters begin to appear. Romney reflects his support base in primarily focusing on high earners, low taxes is meant to support rather than punish merit and create incentives to grow and invest.

Santorum takes a different tack, and this reflects his support base. Santorum is aiming his tax cuts primarily at supporting families, his tax breaks largely reflect a fairly common belief that individuals don't need government help and that if they just had a little more money they could afford health care, help their kids in school more, and be under less stress generally.

I could go on down the list of policies, but that would make for too long of a post.  Generally, however, I believe both Romney and Santorum display virtually identical assumptions. Where they differ is in the class based expressions of both philosophies.  Romney displays the beliefs of people who have done fairly well in the current institutional setup, they've prospered, but they could prosper more and believe that this would benefit everyone else as well, they taxes they are paying are worsening, not bettering, other individual's life chances.

Santorum is expressing the same beliefs but from a different perspective.  Working class individuals agree that merit should be rewarded but are troubled by the fact that they are having difficulty paying for health insurance, affording a house where their kids have access to good school, and feel a lack of financial security.  They feel that something has changed in America and that these changes are at least partially the fault of the government and bad incentives.

These two perspectives lead to very different policy prescriptions. In the sources I read, I see a lot of sneering from better off conservatives at the beliefs of the less well-off Santorum supporters.  They tend to give little credence to the views expressed by Santorum.  I find this somewhat surprising, after all, if a working class individual shares beliefs such as the idea that hard work is rewarded, that market outcomes are just and efficient, that government prevents incentives from functioning leading to social dislocation, and that the market works in the interest of everyone why shouldn't they focus on the individual level social issues that conservatives claim determine outcomes? If the poor are poor because they make bad choices, and government intervention leads to more of these bad choices causing taxes to be raised which means they can no longer afford things like health care because they're over taxed why would the working class voter not focus on social issues? Since the social factors that Democrats focus on are anathema to these voters, what has to have changed over the past 30 years that has resulted in families who worked hard having difficulty affording health insurance, getting their kids into good school systems, and attaining financial security has to be the social issues.

So why is it stupid, bigoted, and short-sighted for these voters to focus on these issues? Educated and rich conservatives are talking all the time about how it's the poor's own fault for not making better choices and how it's not government's job to intervene. It makes perfect sense for the working class to focus on what has changed that has resulted in people allegedly making these poor choices rather than having as great of a focus on business friendly polices as encouraged by Romney. Sure, they share this agenda too, but while business friendly policies are salient to the wealthier, to the working class it is the moral issues that are more directly salient for their economic and social woes. They need to resolve the problems of the family and of preventing these people from making the bad choices that are leading to social and economic decline far more than they need increased incentives at the top, for them, the salient problem is the decline in their own neighborhoods, not capital mobility.

Overall, watching the primary debates and reading the coverage has made me entirely cynical about the American right. In speeches, on blogs, and in campaign press releases they stress their ideas about individual responsibility and culture in order to oppose any policy that would seek to address the social forces or other aggregate pressures that so many researchers and analysts identify as the cause of our problems. Yet, when someone seeks to follow through to the logical conclusion of these beliefs, that the changes in America and our economic problems ultimately have individual causes based on morality and changes in family and social structure, the people putting these views forward are ridiculed and mocked.

In the end, I see nothing but self-justifying elitism. The views expressed serve to justify the self-worth of the powerful, their exalted position in society, and the idea that what is best for them is best for the country. They do nothing but confirm that those at the top are in fact the best, that they deserve what they have, and that those that don't have don't deserve. If they were honest about these views, they'd support the idea that something has to have caused the shift in values that has led to less economic mobility and other symptoms of our economic malaise and that change, beyond lower tax rates, is necessary to deal with it. Instead, men like Santorum are mocked for suggesting that the roots of our problems are in fact social and religious and with family structure, despite these very issues being frequently cited as why inequality is justifiable and why high tax rates punish people for success. As soon as something is tried to be done to fix the lower rungs of society, rather than promote the self-aggrandizement of the top, those that earlier said virtually identical things to justify the inequality all of a sudden are found mocking these views. Frankly, I think it's transparent and it disgusts me.

Of course, I don't share these conservative assumptions and believe that changes in the US are due to shifts in social forces that have to be dealt with through an aggregate, rather than individual, perspective. But I can't help but notice the inconsistency in that arguments that are used to justify opposition to social programs, taxation, and heightened inequality are mocked by the very same people that make them when someone proposes to actually do something about the individual level factors that are supposedly causing our decline. Something has changed, so is it the individual level factors Santorum is talking about, or is it systemic factors that can't be grasped with a purely individual level explanation and analysis? Be consistent.

* To make sure I'm clear, I don't believe in class as an intrinsic property of the market system or of individual relation to the means of production. I do believe that class attitudes can result from poorly instituted policies and from concentrations of power and inequality that are possible under certain economic equilibriums. However, class can be largely eliminated through better policies that don't discriminate based on income level or favor certain types of income that are skewed towards particular ends of the income distribution (this is one of the main reasons I don't like the different capital gains rate, whatever its economic justifications differential treatment of different income sources appears to me to have been a strong determinant in the formation of class attitudes, the long run social cost of maintaining the differential treatment seems to me to be greater than the economic benefits).

Some Praise for the Republican Primary Electorate

I've seen more than a little criticism of the Republican base for its failure to settle upon Romney.  This is in some ways justified but I think it misses an important aspect of the race that I've been observing.

As a follow up from yesterday's post, I'd like to note that I think the Republican base has been very clear about what it wants.  It wants a candidate to provide a viable plan that will allow American's to plan for their old age when they can't work, obtain medical care without being forced into bankruptcy, compete in business with wealthy elites with middle class starting capital, and help their children compete with elites in school without government intervention.

The Republican base's attitude comes out rather strongly in a New York Time's article "Even Critics of the Safety Net Increasingly Depend on It":

“I don’t demand that the government does this for me,” he said. “I don’t feel like I need the government.”

How about Social Security? And Medicare? Can he imagine retiring without government help?

“I don’t think so,” he said. “No. I don’t know. Not the way we expect to live as Americans.”

This pretty much sums up what I think is animating the right wing and is being expressed in the Tea Party movement.  There is a feeling that the need for government has been produced by flawed policies and that there must be some combination of policies that will allow us to reduce the role of government while still allowing us to live as Americans.

All of the Republican candidates have been sensitive to this need, perhaps the most forceful expression of it was Herman Cain's 9-9-9 plan.  Very radical suggestions have been made that the candidates promise will allow us to return to the kind of growth and upward mobility that marked earlier phases of our history.

Despite the grandiosity of these claims, the Republican base eventually becomes disenchanted with each one.  A candidate can promise the moon but once the initial enthusiasm is over the hollowness of these claims is understood.  None of the candidates have so far made a convincing case that there policies will provide what the base is demanding.  The base deserves credit for recognizing the weakness of these arguments and for rejecting each proposal in turn.

As I said yesterday however, I don't believe there is any combination of policies that will provide the base with what it wants.  Social mobility in previous eras was provided either by a sectoral shift out of agriculture towards higher productivity sectors or by a vast expansion in educational obtainment (and this was the result of government intervention).  Neither option is available today.

This makes me strongly doubt that there is any policy solution that will fulfill the base's desire.  But they can't be faulted for not having accepted this, we all grew up being indoctrinated in the idea that the market will naturally provide greater mobility if we let it.  We also hear the same thing from candidates on both sides of the aisle.  Despite the rhetoric, however, I just haven't seen a convincing case made that the rhetoric matches with observable results.

What Americans Want vs. What's on the Menu

As I've been reading numerous articles on the beginning of the Presidential race I've been struck by what I see as a continuation of a basic American idea of the social contract.  What American's want is the same thing that I used to say distinguished Americans from Canadians back when I lived in Canada and was more right leaning.  This is that we accept greater risk in exchange for more growth and a better opportunity at succeeding.

While this is what the vast majority of Americans want, it doesn't seem to be what we've been getting.

This social contract and belief that America is all about accepting greater risks in return for greater rewards and more flexible, more mobile society seems to have formed the basic dividing line in American politics.  On one side are those that believe the problem is that we still haven't taken on enough risk to gain the rewards, just a little more risk, a bit higher chance of going bankrupt or getting seriously ill without sufficient treatment, will push us back onto the virtuous path of accepting more risk and getting the wealth, mobility, and creativity that comes with taking a chance.

On the other side are those that look at the extra risks we've been giving ourselves and just don't see any return.  We were told that welfare reform would mean less poverty because people would work harder, but all we see is that poverty has become more pro-cyclical, in good times we have even more in the workforce and spend less, but in bad times we have even more poverty and end up spending more through less efficient programs. Lower taxes doesn't seem to have led to more job creating investment, instead land and stock prices seem to have been bid up with little or any additional investment in machinery.*  The rich got inflation and everyone else just got priced out of the market on real, job creating capital.  This side is beginning to question the story, maybe the trade off between risk and reward just isn't there, maybe the efficiency/equality trade-off is a myth, and all the additional risk and increased incentives has done is make it more likely for us to fail and more firmly ensconced the wealthy at the top of the pyramid.

This isn't to say that anyone has abandoned the American preference for accepting more risk in the hope of greater rewards. It remains very American to lionize risk and encourage entrepreneurship.  But it just feels more and more like the flip side of this is what is getting gutted. A big part of American entrepreneurship has been our easy bankruptcy laws and a sense that we'll help pick someone back up when they fail.  But increasingly it feels like reforms have been in the direction of enhancing risk by increasing the rewards for winning and kicking those that fall down. 

To a considerable extent, this seems to me to embody the current political polarization in this country.  On the right, there is an increasing ideological conformity to assert that the basic American social contract is correct and true.  We MUST believe that accepting greater risk means greater long term rewards, if we haven't been seeing that it's because the government has somehow interfered with us actually accepting more risk and exposure to the market.  This side seems to spend a lot of time explaining why we should ignore inconvenient data rather than trying to adapt their beliefs to the doubts more and  more people are expressing.  The doubt about the validity of this story is what is influencing a lot of RINOs and moderate Democrats to become disillusioned with modern politics.  We just don't believe that the tradeoff implied in the basic American social contract describes the actual world we live in.  Previous attempts at increasing risk through market exposure just doesn't seem to have the consequences we were told it would.  Why should we believe another round of this will fair better?


What we are left with is those that favor their belief and commitment to the basic American social contract vs. those who pragmatically feel that this just doesn't describe our world anymore.**  One side is far more vocal and passionate, and the other is larger but not passionate at all, feeling more disgust than commitment.  We badly want someone to excite us, but our basic feeling is that what we want simply isn't an available option and we can't much decide between anything that's left on the menu.

Bias in the News: Fox News and Climate Science

I know that beating up on Fox News isn't exactly sporting but I just couldn't resist this.

Compare the opening of these two articles:


Climate scientist admits stealing docs from conservative think tank

Theft, deceit and outright lies: How ugly can climate science get?
Prominent climate scientist Peter H. Gleick relied on deceit and subterfuge to solicit a cache of sensitive internal documents from conservative think tank The Heartland Institute before leaking them to the press -- a fresh scandal that further darkens the highly charged debate on planetary climate change.

Climate Skeptics See 'Smoking Gun' in Researchers' Leaked E-Mails

Hackers broke into the servers at a prominent British climate research center and leaked years worth of e-mail messages onto the Web, including one with a reference to a plan to "hide the decline" in temperatures.
The Internet is abuzz about the leaked data from the University of East Anglia's Climate Research Unit (commonly called Hadley CRU), which has acknowledged the theft of 61MB of confidential data.
Climate change skeptics describe the leaked data as a "smoking gun," evidence of collusion among climatologists and manipulation of data to support the widely held view that climate change is caused by the actions of mankind. The authors of some of the e-mails, however, accuse the skeptics of taking the messages out of context, adding that the evidence still clearly shows a warming trend.

While no one seriously thinks that Fox News if fair and balanced, they could at least try to pretend not to be the mustache twirling villains of left wing fantasies.  With coverage this obviously slanted regarding virtually identical methods of obtaining information they're doing nothing but supporting some people's paranoia regarding bias and control of the media by business elites.

Some Weak Data that the Younger Generation May be Better Behaved than the Older

This is just a small data point to back up a claim I've made a few times that today's youth are better adjusted than at least the past generation.  I think looking at this data makes an important point, I hear too many claims about our country's ills being due to something like moral decay or individuals today being less responsible than in the past.  I am not aware of any data to back up the claims that our problems are individual level instead of at the level of state and national institutions.  This is just another small series of data points to back up my assertion that the youth today are pretty good and pretty responsible, so irresponsibility does not seem to be a likely cause of our nation's ills.

Of course, this data doesn't go directly to my point, it simply shows that use of illicit substances is down and that teens are less likely to have sex.  But it's not a big jump to believe that these behaviors might be correlated with other socially beneficial behaviors (like working hard and trying to get into a good school).  If I was feeling ambitious I could probably get data on college entry and hours worked, but I'm not feeling that ambitious today.  Still, I think it's important to note that there is data supporting the idea that today's youth are more responsible than the last generation, and that it's plausible to believe they are harder working as well (what I remember from hours worked and proportion working seems to back this up as well, but I'd have to recheck the numbers since it has been awhile).  If we want to solve our problems it's important to accurately diagnose what they aren't and data like this helps us do this.

Assumptions and Reality

While I've not been not blogging, I've been catching up on my reading.  Part of that has been reviewing some basic texts in political theory as a bit of a refresher before starting my PhD next year as well as reading a bunch of history while I have time for it.  Reading these two subjects together made me reflect a bit on a basic truth, that far too  many people take their assumptions far too seriously.

Let me explain.  Assumptions, as well as theories and basically all the methods of scientific inquiry, are simply tools.  Assumptions and theories are never accurate reflections of reality.  Rather, they are crutches we use because human beings are incapable of dealing with the world as a whole, such levels of comprehension are left to God.

So, we use observation, theory, and assumptions in order to explore the world around us one piece at a time.  For most of history, the purpose of inquiry was to make our observations match with our theories about how the world worked, since we knew how the world worked the task of inquiry was to discover why our observations matched so poorly with our theory and assumptions.  This led to such achievements of human ingenuity and brilliance as the Ptolemaic geocentric model.  Brilliant, creative, and a stunning example of the powers of human inquiry.  But also dead wrong.

Modern scientific inquiry works a bit differently.  We take our observations as being relatively reliable (though only a fool trusts observation implicitly, it's better than forcing the world to fit preexisting conceptions, but it ain't perfect) and test our theories and assumptions against these.

One problem I notice rather frequently however, is that the success of a theory at explaining one piece of a puzzle inevitably leads some goofball to thinking that they've struck upon the whole thing.  This is nonsense.  The specific area I want to look at is the relation of the individual and society.

Politics vs. the Academy

To take up another older issue, I had some brief thoughts on the back and forth between Tyler Cowen and Krugman regarding, well, I guess, whether it's more effective to convince people by being nice or by taking the gloves off and slugging it out.  Cowen describes the most convincing case as being one that seeks to make the best argument from the opposing side as well as one's own.  He goes on to say, "uch an essay would stand a far greater chance of influencing me, or other serious readers, or for that matter President Obama."

Such an argument is convincing up until he mentions President Obama.  This debate reminds me a great deal of a quote often attributed to Roosevelt,  "you've convinced me, now make me do it."

This is the crux of the problem.  Cowen is undoubtedly right that his method is the best way to convince a well informed, serious readership.  This stance is widely held in academia, I'd say this is the ideal.

However, this stance is also why outlets of questionable veracity, such as Heritage, dominate the headlines, House Budget Committee reports, and most policy debates.  Very few people, even people in decision making positions, can really be classified as serious readers.  When I first decided to start studying politics, I asked some people I knew who were in government in Washington what to read.  The books recommended to me were generally fairly basic, the ones that weren't were notable for how detail oriented they were, not for the depth of their arguments.

In short, I am very sceptical that the Humean approach has any impact on policy whatsoever.  It is certainly the ideal type for discussion in the Academy and is the best way to convince people there.  However, if there ever was a transmission belt for ideas from the Academy to policy making circles it largely broke down decades ago.  Nonsense like the culture of dependency arguments I rail against dominates over good research.  In this environment, it is necessary to pay attention to how politicians and the think tanks they listen to frame their arguments, not what works in elite academic circles.

Now, even given this distinction, I think there is a good argument to be made that Krugman doesn't play this game all that well either.  While he likely helped inform some of the arguments made by the Occupy Wall Street protests, I don't see much evidence that Krugman has had a large influence on actual US policy.  While this may or may not be due to his skill at this game, it may be that the system is not easily moved by arguments made by individuals no matter how well they play it, Cowen's approach seems to me one that would reduce Krugman's influence from negligible to nonexistent.  Presenting both sides as strongly as possible simply isn't how you convince people, it works only with people that have been highly educated to respect this particular form of argumentation.  It certainly isn't how you win an argument in a meeting, around the dinner table, or in a bar.  But if you want to influence policy, you need to be able to change the grounds for argument in those very places, not in polite company. 

The critical thing is about making policy makers do something, and to do this you need to win the argument in a bar, not in the faculty club.

(Looking at Cowen's list of influential intellectuals, I am also struck by how his list doesn't exactly match with people noted for their polite use of the Humean method.  Milton Friedman was pretty forceful about his views.  Charles Murray is also an interesting example, he influenced policy despite being pretty much universally regarded as wrong by the academic community.  His interpretations just don't stand up to scrutiny.  He was also quite vicious to the opposing viewpoint, though unlike Krugman his dismissal of other views was presented politely, if not accurately.  He didn't give them a fair shake however, he misrepresented them in ways that are similar to what Ryan does by presenting a choice between opportunity and equal outcomes.  False choices, not real choices, that don't actually communicate what anyone is saying.  As any grade school kid knows, lying by omission is just as bad as lying by commission.  But it's tempting, because it seems to work in practice.  Well enough to get the author of The Bell Curve onto a respected economist's most influential list anyway.  With real policy alterations to back up his place on it.)

Conservatism's Other Pole

I've been procrastinating quite a bit lately, but would like to briefly cover some old news.

David Brooks had a column back on December 30th which touched on an important issue.  That is the style of Conservatism that is rooted in family and community rather than the market.

This is the form of Conservatism that is written about by Russel Kirk, who wrote a book I commented on in the early days of this blog.  I can't say I agree on many points with this philosophy but I have a great deal of respect for it.  It poses a number of difficult questions and makes explicit a number of costs of the development of the modern market and society.  Even where I disagree with it, I have to admit that something is being lost with my preferred choice.

I'd contrast this form of Conservatism with the more Friedman/Hayekian viewpoint.  I don't have much respect for this tradition.  That is for the simple reason that I think this view uses an overly simplified notion of humanity, it lacks humility about its conclusions and frequently fails to see how its assumptions rest upon simply ignoring a large number of well established observations.

I see the Friedman/Hayekian road that Conservatism has gone down as being so popular because it took the hard choices and sacrifices that I respected so much in Kirk's view and simply said none of these things are really problems.  Where Kirk thought human nature was such that human choices in the market and in rationalized political systems could never lead to optimal outcomes and that instead we had to respect history, tradition, and community in order to not destroy what we have, the newer viewpoint seems to simply hand wave these problems away and say that rational, optimizing human nature will supply these things through individual competition.  Unlike Kirk, it never seems to stop and reflect if we actually observe this.  It's a vision that has appeal for the same reason as philosophies like Marxism do, they promise that there is some kind of natural law that leads inexorably towards an optimal outcome, provided those laws are allowed to work.  It's simple, there are no real sacrifices, only an ending of privileges that hurt the people that receive those privileges.

As you can tell, I think this is bullshit.  I respect Kirk's philosophy, I may not agree with him on what tradeoffs to make, but I agree the tradeoffs are there.  I disagree with the other Conservative pole that seems to hold there are no tradeoffs, they may mention a tradeoff between security and growth, but obviously, growth provides security so there's really no tradeoff.  Only the optimal viewpoint, mine, and the stupid and shortsighted viewpoint, yours.  Bullshit.  I don't buy this strand of Conservatism's philosophy or outlook, real life is about hard choices between things where there is no clear long run optimum.  Obviously correct long run optimums are the product of dropping considerable parts of the human experience out of the analysis, if you ignore the realities of power, the draw of community, and the actual performance of spontaneous civic associations, such as guilds (or simply redefine ones that perform poorly as government, which I've seen done rather often when the institution is clearly not part of the formal state but its non-state status is inconvenient), only then can you have a clearly optimal solution. 

Sorry, I started ranting.  The main thing I wanted to point out is that I'm glad to see Kirk being brought up again, him, and thinkers like him, don't receive enough attention today.  I think this is one of the big things missing from American politics, we need more discussion grounded in this stuff and the tradeoffs inherent in using the market and rationalized political systems to govern our societies.  There are big advantages to this, but we need someone to focus on what is potentially being lost so that we don't get so caught up in what we may gain that we end up looking back and discovering our world has gotten worse, not better.  Neither party seems to be doing this in America today, instead we have a party of radical change through the market and a party of gradual change through the market and rationalized politics.  We have no one that is mounting a real defense of what we stand to lose if we're not careful.  Conservatism would be better and more effective if people started reading more Kirk and less Hayek and Friedman.

Entitlement vs. Opportunity? How about Merit vs. Wealth?

I ended up taking a bit of a vacation from blogging, but a recent Romney op-ed has sufficiently roused my ire to provoke me to get energized again.

In this op-ed, Romney attempts to claim that there is a choice between an entitlement society and an opportunity society.  He also goes on to claim that Obama has overseen a vast expansion of government, a claim which has been sufficiently debunked elsewhere (the short form, GDP plunged and automatic stabilizers increased under existing law, Obama's additional spending has almost all been temporary spending).  He also tries to link unemployment to this alleged increase, never mind that this is a worldwide phenomenon that seems worse in countries with weak entitlements than ones with stronger stabilizers. 

My big problem with all this is I can find no empirical evidence to back up Romney's claims.  I have been doing quite a bit of research on the topic, I am strongly considering researching dependency as the topic for my PhD thesis.  I can find no evidence in aggregate statistics that any of the impacts of this alleged creation of dependency.  It is true that government programs can reduce work, but they do this as a result of effective marginal tax rates, means testing, and the difficulty of enrollment (which makes someone reluctant to get off a program because they are unsure of their ability to succeed and are unwilling to go through all the hoops again if they fail).  The solutions I've heard from those that share some of Romney's beliefs, such as Paul Ryan, strike me as tending to increase rather than decrease these problems.  Reducing government spending through more means testing and tougher enrollment programs is likely to increase the number of the hardest cases, not decrease them.  It will likely lead to lower spending, but these efforts tend to reduce the numbers of temporary users of government assistance, not the numbers of people unable to find permanent employment.  This reduction in turn leads to an actual increase in the hard core of the most deprived, people that would have been prevented from sliding into permanent dependency with a bit of help slide down too far to get back up without it.

The biggest problem with Romney's statement is that I believe it presents a false dichotomy.  Increasingly, opportunity in our society seems to depend on wealth.  If we want a merit based society, it is necessary for public programs to seek to reduce the gap in opportunity between those with wealth and those without.  The idea that there was a strict separation between opportunity based interventions and general egalitarian interventions that was once present in American politics seems to have been increasingly falsified by the evidence.  Instead, the right has abandoned the idea that government can promote opportunity and merit entirely.

This doesn't seem to fit the evidence.  Instead, we've found that egalitarian benefits programs promote opportunity.  Countries that don't means test their benefits have some tendency towards lower gaps in performance between the poor and the rest, college completion rate gaps are not as wide and income mobility is higher.  The problem isn't that of entitlements vs. opportunity, it looks to be more like that between merit and wealth.  Without state intervention, the free market presents greatly varying opportunities to individuals with different families.  Competition may be more fierce within each income bracket, and the size of the penalty for falling a notch likely  makes this competition considerably more fierce and ruthlessly sorts those in the higher income brackets, but competition between income brackets becomes far less.  Today we see people in big cities complaining about things like needing to afford private school to be middle class, this is the kind of thing that indicates that it is increasingly opportunity and not just consumption that is unequal.  Increasingly the sins of the fathers, or the merits of the fathers if you're the glass half full type, are delivered onto the sons. 

Only the very best can rise above poverty, but being not actively incompetent is enough to keep you middle class or better.  As our society becomes more complicated and the need for training ever greater it becomes more difficult for our society to sort rewards by merit rather than wealth.  It is necessary to step in to overcome relative deprivation in order to combat this inequality of opportunity, the alternative is that merit will be something that matters only to the very best who can overcome all obstacles and those that are in the broad middle will be sorted not by their merit relative to each other but only by their wealth. 

This is what I fear Romeny's ideas will lead to.  It is things like this that make me so fascinated by decadence.  Something that strikes me about most civilizations is that their problems are widely known well before their collapse.  Some sort of moral belief tends to interfere with addressing these problems.  In our case, I think the moral belief that may bring us down is the belief in dependency and trying to sort the deserving from the undeserving poor.  It is widely held, despite a severe dearth in evidence.  If we follow the rhetoric being used by Romney into actual policy, the impacts are likely to be the opposite of the intent.  This is the kind of course that can easily become a downward spiral, the increase in the social problems as a result of the policies reinforces the moral force of the arguments that originally lead to the policies leading towards ever more extreme institutionalization of the failing policies.  This makes small problems big problems, if this continues for a long enough period of time, collapse follows.  This is one way civilizations can and do fall, morality takes the place of rational policy and what should have been minor problems increase in scale and severity as a result of irrational policy.  This is why I get so worked up about this particular issue, dependency is a very compelling argument to many people, but it lacks an empirical basis.  It is combating a bogeyman, but combating this bogeyman has the potential to create real monsters.

The Tension Between Competition and Community

I have unfortunately not had enough time for a detailed post.  However, I found a recent NY Times article on some of the problems with school choice interesting.  It describes how the introduction of charter schools and school choice has undermined what were before community schools.  Now, these community schools weren't necessarily great but the evidence that the new schools are better is mixed.  This has come at the cost of having kids go to school with other kids from their own neighborhood.

This ultimately, illustrates my central disagreement with American Conservative thought.  I find myself increasingly sympathetic as I grow older to the Conservative philosophy's emphasis on community.  What I find myself questioning (aside from how community is defined, who the community should work for, and some other questions) is the Conservative belief that the best way to foster community is to withdraw government and let the market work.  I'm aware of the Libertarian, and particularly Hayekian, assertion that spontaneous coordination will emerge from market interaction.

While I agree that this provides a strong theory, what I am sceptical of is whether the evidence actually supports the theoretical argument.  This is ultimately an empirical question, as the state weakens do spontaneous community organizations grow more able to deliver needed social goods.

While the groups that do exist certainly grow more influential and powerful, supporting the growth and influence of local elites, my reading of the evidence I'm acquainted with is that this notion is basically wrong.  Studies of private social services show that they exist as a complement to stay spending, they tend to increase as the role of the state does (the one big exception being private transfers, studies of poor countries show that those achieving higher market incomes give a great deal to their poorer relations, I am sceptical that this is beneficial, it should have similar work discouraging effects as government giving and it should also serve to reduce the assets of the givers making them less likely to be entrepreneurial, resulting in non-merit selection of those without poor relatives over those with poor relatives in the marketplace, leading to inefficiency and loss, government action distributes the burden more equally, and can do more to eliminate work disincentives of social programs, resulting in not only a more competitive but also a more equitable society).  The state can be thought of as providing a baseline service that private non-profits build on top of.  Where they would be overwhelmed without the state, discouraging many, with the state those with the talents and energy see themselves making a real difference (it needs to be noted that the role of the church before the state showed that this type of organization was insufficient, while the church deserves credit for what it supplied its efforts were grossly inadequate to the needs and lacking the powers of the state it often delivered its services inefficiently as well as inadequately, still they were for a long time the only game in town).

We can also look at the decay of membership organizations, like the Elk club (to name one), relative to our past.  As workforce participation has risen and people have become more mobile such groups have declined in importance.  We have become more strongly connected with markets and this has made us far more atomized than we were in the past.  Government efforts to reverse this have been grossly inadequate (and efforts by both parties have been opposed by the other) but have at least served to slow this decay.

I could give more evidence, but to some up my point this is the critical part where I differ from the Conservative movement.  I don't really buy Hayek's spontaneous coordination argument, I believe the state reinforces these efforts not competes with them and that it is the market that erodes them.  All these forms of organization decayed rapidly with modernization and marketization, while the state was expanding at the same time there is a much clearer causal explanation involving labor markets and mobility for this decay than there is for the state (exempting totalitarian states such as Germany or the Soviet Union, in a democratic society however spontaneously organized groups provide large advantages and complement rather than compete with the state).

This is How They Lie to You: Paul Ryan Edition Pt. 1

The House Budget Committee, under Chairman Paul Ryan, has put out a report on income inequality that basically seems like a rebuke of the CBO report on inequality.  Reading over the Budget Committee report, I was struck by how dishonest it was.  It is my purpose to expose this dishonesty.

To do that, it is my purpose to go over the report with a fine toothed comb.  Where it is inaccurate, I will point this out.  This will be rare, blatant dishonesty is generally avoided with this kind of publication.

What I will be focusing on instead is a few things.  First of all, lies of omission.  In a number of places information that should be known to any budget analyst that would cast doubt on the commission's conclusions is withheld.  Inequality is a topic I've done a significant amount of writing and research on, when possible I will provide exact information to show how deceptive the selective information in this report is.  Unfortunately, however, I am not an expert on this.  Where I do not have a current citation on a specific piece of information I will be forced to more generally direct you to a set of works that deals with the topic, rather than provide a specific citation.

The second major focus will be on deceptive manipulation of the numbers.  There are a number of places where changes in type of expenditure are presented as if they were reductions in expenditure and other abuses of trust such as this.  I will discuss these at some length.

The third focus will be on the rhetoric, which has been a topic of great interest to may lately.  This report displays a number of the rules of propaganda (summarized in Europe by Norman Davies on pages 500 - 501 for an easy reference).  In particular, the report tries to drive home a narrative that I see as dominating far right discourse, that individual responsibility and social responsibility are mutually antagonistic.  Also, that equity concerns are necessarily in competition with efficiency concerns.  Neither of these narratives have empirical supports, I will be showing where they are simply assumed.  This flaw in reasoning falls under "the rule of unanimity: presenting one's viewpoint as if it were the unanimous opinion of all right thinking people" (in this case, it is displayed as a self-evident fact of the world, with no alternative conceptions even being addressed).  The other main rule is the rule of simplification, for instance whereby the Budget Committee expresses the choices facing us as pie-growing vs redistribution, rather than differing views on how best to grow the pie (this also falls under rule 2, "the rule of disfiguration: discrediting the opposition by crude parodies).

I expect the analysis of this to take quite some time and a number of posts.  Hopefully I'll be able to drive my point home of just how deceptive ideologues like Ryan are being in reports such as this.  I believe that a primary cause of our current polarization is that manipulation such as this has inserted memes into our culture that have served to corrode what was a previous since of the country sharing our burdens at all levels, individual responsibility reinforced family responsibilities which reinforced community responsibility all the way up to the national level.  By contrasting individual responsibility with social responsibility the far right corroded this basic consensus breaking down the bonds of trust that linked shared responsibility into a circle with each stage reinforcing the next.  This was achieved not through the content of what was being argued but rather by framing and by controlling the narrative, my focus is on exposing the frame and narrative for what it is to expose the weakness of the content of these arguments.

I do wish to briefly address why I think inequality matters so much.  It's not because of fairness, or even because I think inequality threatens growth and stability (which I think it does).  It's because growing inequality has not been met by a corresponding increase in responsibility, for a given burden of costs the share of taxes paid by the wealthy has increased more slowly than their share of income.  This means that the rest of us pay relatively more with a relatively lower share.  Not only has income median income growth been comparable to 18th century rates of growth, we've seen our share of the burden of government increase proportionately faster than our share of incomes has declined.  There is also the social problems that income inequality has historically led to, but fundamentally the issue is that the growing inequality has resulted in a real increased per capita burden on the rest of us.

I will also state that I come from an intellectually different universe than Ryan.  His economics starts with an assumption that all economic growth is essentially consumption driven, the tendency to invest is ultimately driven by people deferring present for future consumption at a discount rate.  From this view, increasing the gains to be had by success and the penalties to be had by success will motivate people strongly because their consumption function will alter more drastically.

I believe this is hogwash, I see people as being primarily status driven with a secondary concern of maximizing security.  Investment and growth occurs because people strive for a greater relative position, when they see the path to this broken because all their efforts are taken up by necessary consumption, whether status consumption or the fulfillment of physical needs, they cut back on work and investment because they fail to see the point, they're not motivated by the potential future consumption but by instead the prospects for relative gain.  In highly unequal societies people see their efforts as being insufficient to compete with others with so many advantages so they stop trying.  The secondary goal is security, lacking a secure means of subsistence (which has expanded with expectations to include goods such as healthcare) means that people will fail to act on opportunities or take risks for fear of losing what little they have.  People with a family based safety net tend not to consider this, the worst prospect of failure they face is moving home with the parents.  This makes them believe that long term payoffs and risk taking are natural, having never had to face the prospects of living on the street they don't fully understand how this would shape their behavior if faced with this scenario.

As per usual, this introduction expanded beyond my original intention.  I will now begin to dig into Ryan's report in earnest for future posts.  I'm not sure how long this will be, but I can promise several posts for the level of detail I intend.