Who Benefits? Who Pays?

I have said it before: it isn't how big government is that matters, but who benefits. Conservatives rail against redistribution. That's a smokescreen. For four decades, redistribution has been upward.

Dean Baker of the Center for Economic and Policy Research posted an excellent article yesterday making the point better than I. The argument isn't over government size. The argument is over rigging rules to benefit the wealthy.

As Dean Baker explains: "[Conservatives] don't object to big government, they object to government programs that help poor and middle class people."

Rules Are Rules

Got carded this evening. I just wanted a 12-pack of beer. Nothing exotic. "What's your birthday," the Dollar General cashier asked.

"April 20," I answered.

Wasn't good enough. I had to give her the year.

Don't think I can pass for 20. I'm old enough to remember Pearl Harbor, but not old enough to remember the Maine.

Not sure I really wanted the beer all that much.

Character And Society

New York Times columnist David Brooks sometimes calls attention to the work of social critics with whom I am not familiar. Last March, he published an interesting column centered on the work of James Q. Wilson.

I don't know Wilson's work, but I am intrigued. Some of Wilson's observations focus on what I would call the collective aspect of character. For example: “At root,” Wilson wrote in 1985 in The Public Interest, “in almost every area of important concern, we are seeking to induce persons to act virtuously, whether as schoolchildren, applicants for public assistance, would-be lawbreakers or voters and public officials.”

How can we do this? As Brooks describes Wilson's writings, "When Wilson wrote about character and virtue, he didn’t mean anything high flown or theocratic. It was just the basics, befitting a man who grew up in the middle-class suburbs of Los Angeles in the 1940s: Behave in a balanced way. Think about the long-term consequences of your actions. Cooperate. Be decent."

Follow the dictates of Miss Manners.

Wilson, Brooks explained,  did not believe that virtue was inculcated by prayer in schools. It was habituated by practicing good manners, by being dependable, punctual and responsible day by day. He emphasized that character was formed in groups. “Order exists," Wilson wrote in 1993, "because a system of beliefs and sentiments held by members of a society sets limits to what those members can do.” 

Wilson's views in this respect remind me of the power of what I learned as a young naval officer was "customs, tradition and usage." Very powerful, indeed.

I think this is exactly what Hillary Clinton had in mind in her 1996 book,  It Takes A Village. The book was, of course, roundly condemned by conservatives.

"No, it takes a family," the conservative choir rang out, led by Bob Dole and Rick Santorum.

One of the things I learned from tracing my own genealogy is that, for most of our history, it was impossible to tell where the family ended (parents, siblings, cousins, aunts, grandparents, grandchildren, etc.) and the village began. They were all part and parcel of the same social setting and were mutually reinforcing.

That reinforcement is a major reason families and children under stress were able to survive depression and war in the 30's and 40's. 

But that's another story. I'll pick up the thread sometime soon.

Taxes: Who Benefits And Who Pays?

Most of us don't like to pay taxes. But that's how we pool our resources to do things for our community, county, state and nation that wouldn't be done by individuals. The "magic of the marketplace" won't educate all of our children, build roads and bridges, eradicate diseases such as yellow fever and smallpox, build the foundations of a national economy, operate police and fire departments or defend the nation.

So how to devise a fair, effective, efficient and sensible system of taxes?

Yesterday National Public Radio's web site published a summary of a panel discussion on last Tuesday's Planet Money radio show. The title: "Six Policies Economists Love (And Politicians Hate)."

The proposed policies:
1. Eliminate mortgage interest deduction;
2. End deduction companies get for employee health care;
3. Eliminate corporate income tax;
4. Eliminate all income and payroll taxes, replace with consumption tax;
5. Tax carbon emissions;
6. Legalize marijuana.

There you have it. The summary provides some rationale. The piece is worth reading. I'm not convinced, but it can't hurt to reexamine how we do things.

Are Most New Jobs Created By Small Businesses?

Not exactly. It turns out most new jobs are created by large firms (500+ employees). But as economist Jared Bernstein explains, some data series refer to the size of "establishments" which might be the local outlet for a large business, and some refer to "firms," in which employees of the local outlet would be included in the larger entity. Think, for example, Wal-Mart.

Bernstein explains: "So, the question is, do any of these size classes contribute disproportionately to job growth?  In fact, they do, and the winner is…not small firms.  Whether is business cycle expansions or the full run of these data, large firms — 500+ employees — contribute disproportionately to job growth.  The small firms — less than 50 workers — in fact, contribute proportionately less than their share."

Neither Bernstein nor I have anything against small businesses, we just want the discussion and any resulting policy to reflect reality.

Government Austerity At The Present Time: Bad Idea

Economist Mark Thoma provides a link to an interesting posting by Simon Wren-Lewis once again refuting arguments by the Austerians. The key passage:

"....let’s just go through the economics one more time. Macroeconomic theory is as clear as it can be that austerity in the current situation will reduce output and raise unemployment. ... The evidence is also about as clear as it ever is in macro."

Wren-Lewis offers another thought as well. Worth reading.

Capabilities Vs Intentions And South Avenue

In matters of military intelligence, a common admonition is that evaluation should be based on capabilities rather than intentions. For example, rather than guess that in late 1941 Japan would attack in southeast Asia, we should have known that they had the capability of attacking Hawaii and prepared for it.

I have a problem with that concept. At least in the short run, the only thing that matters is intentions. We assumed, for example, that Great Britain had no intention to attack the United States, though they had the capability. Same with France. So we wasted no time and resources planning to defend against their forces.

We focused our intelligence gathering on countries that might plausibly become enemies. And we did our best to find out the specific intentions.

After the attack on Pearl Harbor, we succeeded beyond expectations at uncovering specific plans, schedules, order of battle, and other details. And we used the information. That's why our forces were in the right position to succeed at Coral Sea and Midway. It helped us track down German submarines. It helped win the Battle of Britain.

In some contexts, though, it makes sense to focus on capabilities rather than intentions. Intentions change. When planning for the future and developing policies, it makes sense to focus more on what CAN be done rather than what WILL be done.

This is especially so when developing public policy.

When writing laws, drafting regulations, putting policies in place, it does not matter what the present intentions of office holders may be. Elections may change who is in office. In this context it makes no sense to ask how incumbents plan to use their authority.

My advice: always assume that if law and regulation allow something to be done, then at some point it will be done.

That's why I oppose Oriental's effort to exchange the South Avenue right of way which can't be sold for a waterfront parcel owned in fee simple which can be sold. Assume that if it can be sold, at some point it will be sold. Once the waterfront is in private hands, the public will never get it back.

So the public's interest in any such acquisition must  be protected.

Yes, I want to tie the hands of future town boards.

Dump The Runoff II

Two years ago I suggested that NC should join 42 other states in the union and abolish the runoff primary. I haven't changed my mind.

Some reasons:
a. Runoff primaries are expensive. They cost nearly as much to administer as a regular primary, nearly doubling the cost to taxpayers of administering the party nomination process (which is what the primary is);
b. Turnout is abysmal. In Pamlico County, turnout for this year's second primary was three percent of registered voters; across the state it was three and a half percent;
c. Runoff primaries are a holdover from the time when southern states had only one effective political party - the Democratic party, and whoever won the primary had won the election. That is no longer the case;
d. Runoff primaries seldom change the outcome - the leader after round one usually wins, anyhow;
e. A runoff primary delays the election process - results aren't final until after canvass. This year, County Boards will canvass on July 24 and State Board a week after that, delaying the start of down-ballot campaigns;
f. It isn't more democratic to have a tiny fraction of the electorate determine the outcome.

One way to accomplish the same purpose as a runoff is to hold some sort of instant runoff vote by ranking voter choices. We tried that for a judicial race two years ago. Voters found it confusing, our voting machines aren't certified for such a procedure, and the state board had to develop a work around.

Other states just award the nomination to the candidate with the most votes on primary day. Simple and effective.

While we are on the subject of primaries, I have also concluded it is inappropriate to vote on ballot measures during a primary. Ballot measures should be voted on at a general or municipal election, not an election designed for nominating party candidates.