Language and the Constitution

While boxing up stuff to put in storage while the house is restored from Irene, I came across an interesting clipping.

The late James Kilpatrick, conservative columnist, commentator on the US Supreme Court, in his final years published a regular column titled "The Writer's Art." One of his final columns, "Simplify Overstuffed Sentences," printed on page 13A of the News and Observer of Saturday, August 30, 2008, shed an interesting light on the Court's 2008 decision that the Second Amendment grants an individual right to keep and bear arms. I posted a comment on that issue last January.

Kilpatrick's 2008 column takes issue with loose use of "people."

"A recent item in the Washington Post began 'Federal prosecutors charged 11 people yesterday with the theft and sale of more than 40 million credit card numbers...'
People? Eleven people? Suppose the charges are dismissed against 10 of them. What's left? One people.

"The solution to this perplexity is to reserve 'people' for lots and lots of human beings with some common bond - e.g. the dispossessed people of Darfur. The noun 'person' carries a smaller load of baggage.

"Thus the Constitution speaks of the right of 'the people' peaceably to assemble, to keep and bear arms, and to be secure in their homes. But when it gets to crime and punishment, the Constitution says that no 'person' shall be put in double jeopardy, no 'person' shall be compelled to be a witness against himself, and no 'person' shall be deprived of life, liberty or property without due process of law.

"Those old boys who wrote the Bill of Rights had a lovely feel for language. I wish our present leaders were equally blessed."

Kilpatrick didn't say so right out, but one of the leaders he might view as linguistically challenged is justice Antonin Scalia, who drafted the decision in District of Columbia Vs. Heller. In that decision Scalia concluded the "right of the people to keep and bear arms" was an individual right.

Kilpatrick would dissent.

If the authors of the Second Amendment had intended the right to be an individual right, they would have written 'persons.'

Imprison Mosquitos?

My last post on mosquito control was intended as a tongue in cheek comment not only on mosquitoes, but on programs that obviously need to be carried out by government. The idea of relying on individuals to spray their own property is (I thought) patently ludicrous.

Had I attended last Monday's county commissioners meeting, I would have learned that one commissioner insisted the county's spraying program confine itself to public rights of way.

You can't control mosquitoes that way.

Normally, mosquitoes confine themselves to an area within one to two miles of the place they hatched. Some are more peripatetic, and have been found seventy-fives miles from where they hatched.

Unless the commissioner in question knows of some way to confine mosquitoes to the lot on which they hatched, the policy she proposes will be totally ineffective for mosquito control.

Why worry? Aren't mosquitoes just a nuisance? Well, no. They transmit diseases that can be fatal to man and beast. West Nile virus and equine encephalitis, for example.

My father suffered from malaria. He didn't contract it in the jungles of New Guinea where he served during WWII - he contracted it as a child in Holmes County, Mississippi.

Malaria disappeared from the US in the 1940's as a result of a number of measures, including aggressive use of DDT. We know better now about other adverse consequences of DDT.

Maybe someone will develop mosquito prisons.

Another Government Program

I was up early this morning and saw the public works crew fogging for mosquito control.

Another government program.

Why don't we just let each homeowner fog his or her own property or implement his own preferred mosquito control measures?

Is a Penny Saved a Penny Earned?

Benjamin Franklin told us "a penny saved is a penny earned."

Maybe.

Three years ago, during the budget process, Oriental's town manager briefed the commissioners (I was one of them) on increases in various insurance premiums. One of the expenses was (as I recall) about $900 for flood insurance. We discussed the option of self-insuring on the grounds that during hurricane Isabel, the highest storm surge in anyone's memory, the only loss was the carpet. Two or three years' premiums would more than cover such a cost.

We deliberated and decided to self-insure for flood loss.

Hurricane Irene confounded our expectations. The storm surge flooded Town Hall about a foot deeper than Isabel. There was quite a bit of damage.

Some of the damage would have been covered by flood insurance. Some would not. Mold, for example. Some damages would have been reduced by depreciation. It would be good to do a careful calculation of the benefits we would have received from flood insurance against the expense we avoided by self insuring. The board might or might not want to reinstate flood insurance.

As Yogi Berra said, "it's difficult to make predictions, especially about the future."

Do We Really Need Smaller Government?

Yesterday's New York Times had an op-ed piece entitled "Our Hidden Government Benefits." The article summarized a 2008 survey.

"A 2008 poll of 1,400 Americans by the Cornell Survey Research Institute found that when people were asked whether they had “ever used a government social program,” 57 percent said they had not. Respondents were then asked whether they had availed themselves of any of 21 different federal policies, including Social Security, unemployment insurance, the home-mortgage-interest deduction and student loans. It turned out that 94 percent of those who had denied using programs had benefited from at least one; the average respondent had used four."

I confess. I have used government services all my life. Still do.

Did you put your hurricane debris out in front of your house to be picked up? FEMA pays most of that bill, the state of North Carolina a big chunk and town government the rest. How would we deal with that without government? Not very well. Today I received a check from FEMA and one from my insurance company (to be repaid from the National Flood Insurance Program). There will be more payments. I also received my monthly social security check.

This afternoon I have a doctor's appointment to review my annual blood test results. Who pays? The U.S. Government. Earlier this week the town's mosquito control operation fogged mosquito breeding areas. Who pays? Town government, supplemented by state government.

The list goes on. We all use government programs.

We live in a democracy. The government isn't "they," it is us.

Rising Tide?

President Lyndon Baines Johnson was fond of saying that "a rising tide lifts all boats."

Perhaps that was so in the 1960's. Much has changed since then.

A graph prepared by the Center on Budget and Policy Priorities shows that from 1947 until 1975, income gains increased at about the same rate for all income groups. Rates of increase for the bottom fifth of families, median income families and wealthy families were almost indistinguishable.

Since 1975, though, there has been no income gain for the bottom one-fifth of families (2010 income same as 1973); about a 15% increase in incomes of median income families over the same 35 year period, and more than fifty percent increase in income for wealthy families.


If people who work for a living believe they have not got ahead at all in the past three and a half decades, they seem to be right.

The 95th percentile, of course, refers to families with income greater than 95% of the population. What about those in the top 1%? How about the top 0.1%? Here's another graph showing who has really made out. Based on slightly different data, but it tells the same story.

So if there is class warfare, who's winning? Billionaire Warren Buffet got it right: "my class is winning."

Why The "Dismal Science" Is So Dismal

I have to share the following post from yesterday's blog by economist Jared Bernstein:

There's No Market For Good Economic Policy

Sep 19, 2011

A few weeks ago I referred to austerity economics—fiscal or monetary tightening when we need both to be expanding—as akin to the medicine of medieval times.  Bleeding patients was thought to cure them, but it generally made them weaker and less resistant to disease.

Paul Krugman uses the same analogy today and I was reminded of an aspect I hadn’t thought of before, having just finished a (great) historical novel covering the period in history when medicine was just beginning to wake up (World Without End by Ken Follett).

The way Follett tells it, by the end of the 14^th century, private hospitals began offering alternative treatments to those in the monasteries.  Monks were still practicing bleeding and other “austerity” measures, but early physicians were beginning to understand that such practices were…um…contractionary to your health.
So people began to migrate away from the monks and their ancient ways.

In other words, there was a market—you could choose, and once people were able to assess the different results, the choice was obvious.

And here is where the analogy breaks down.  Unemployed workers, families unable to make their budgets on shrinking paychecks and falling incomes, small businesses suffering from a lack of foot traffic—they can’t go across the street and try a different macroeconomic policy.
They have to accept the austerity whether it’s coming from the Fed (“we’ve got some other tools here but we’re just not ready to use ‘em”), the Congress (“the President’s jobs plan won’t work”), the European Central Bank (“price stability uber alles!”), or the medievalists of Europe (“only by contracting will you grow!”).

I guess one could argue there’s an election market for such choices, and in some sense, the “throw the bums out” dynamic fulfills that role.  But it’s a slow, cumbersome, and noisy process—there’s so much misinformation that it’s hard for people to sort out the facts, so you end up with politicians who claim to be different but have their leeches and bleeding bowls at the ready (see Republican field).

The only way out of this mess is to reach more people—voters—with the evidence-based facts of the case.  It won’t always work—the noise machine is powerful and well-funded.  But the truth will out.
I mean…I hope it will…it will…um…right??  Hello…anyone there??!!

Risks of Risk Avoidance

Life is full of risks. It may be that most risks can be avoided. Avoiding risks also avoids benefits.

Take, for example, the case of Wikileaks. The failure to share information among government agencies contributed to the attacks of September 11. But sharing information carries the risk that someone with access will abuse that access.

Or take the case of Solyndra, the risk of government guaranteed loans against the possibility of a technological breakthrough. No risk, no breakthrough. That outcome is certain.

The best comment on that issue, and the most appropriate cautionary advice, was posted today by economist Jared Bernstein:

Solyndra, Risk, and Risk Aversion

Sep 17, 2011

The bankruptcy of Solyndra, a solar panel manufacturer that got a government loan of over $500 million from a (GW Bush era) loan-guarantee program, is garnering a lot of headlines.   Opponents of the administration are salivating at the opportunity to use this as an example of all things bad about activist economic policy, “picking winners,” and so on.

De facto, this was a bad investment choice.  And if it was influenced by anything other than the objective risk analysis, as some critics are alleging, that should be brought to light.

But if this episode, amped up by the intense private market ideology of our time, leads us to become totally risk averse in terms of government’s investment agenda, to shut down our efforts to foster innovation in clean energy, for example, we will deeply undermine our economic future.

Solyndra’s potential edge was that the company figured out a way to make solar panels without polysilicon, a key ingredient in solar panel construction, and one whose price looked high and volatile through the mid-2000s, making the Solyndra investment an interesting and potentially useful hedge.

But as this NYT article points out, the price fell steeply and the decline appears to have largely occurred before the loan was finalized:

“…the price drop meant that before Solyndra had received a single DOE loan guarantee dollar, a major part of its cost proposition had been undermined, if not erased.”

I’ll get back to that part of the case in a moment.  My point here is to remind us why it’s important for gov’t to make these investments and why the wrong lesson from this case would be to turn tail and run from such public/private endeavors.

There are many reasons for the federal government to play a role in this part of the market, ways in which the market historically fails to adequately invest in potential technological advances.  They come under the rubric of negative externalities—barriers that block market forces from delivering what we need, including barriers to entry, expansion, coordination, and innovation that no single, private firm can solve on its own.

–Research Barriers: R&D can be prohibitively expensive and few firms can support the amount of research needed to advance new endeavors, like advanced battery or solar technology.

–Coordination Barriers: No single firm could coordinate national projects like the internet or smart grid

–Innovation-to-Production Barriers: Firms need help getting out of the “valley of death,” that period between discovery of an innovation and the development of the production processes that enable it to be affordably adopted by society.

–Credit Barriers: Markets will underinvest when returns are particularly uncertain—it’s a classic externality in that firms cannot typically recover the costs of R&D in new areas of research.  Eg, when the internet was just an idea, too few private lenders, including venture capitalists, would support basic research on the idea.

–Exports: Firms need the federal government to help open export markets and pushback against unfair trade practices.

So how do we square these perfectly reason rationales, ones adhered to in every advanced economy, with our perfectly reasonable desire not to waste valuable taxpayer dollars on bad choices?

The answer is that we must recognize and accept some credit risk.  There will be cases when research goes down fruitless paths and when a hedge like Solyndra turns out to be trumped by ensuing events.  Risk analysts deciding to guarantee the loan in this case may have legitimately believed the price decline in polysilicon would soon reverse and that it made sense to foster an alternative.  But they may also have missed an important structural shift in supply and demand.

Either way, the key word is “risk.”  We can totally avoid such risk, but in so doing, we will unquestionably hurt our long term economic prospects.  Think about the development of early machine tools that gave rise to manufacturing, railroads, transistors, lasers, satellites, and the internet.

In every case, some or all of the above externalities/barriers were present.  Had the gov’t practiced the level of risk aversion now being advocated in the wake of the Solyndra bankruptcy, the private market would not have developed them, at least not here in America.

Think about that the next time you use a cellphone, GPS, or post or read a blog.  We should always strive for better, more accurate risk analysis.  But if we try to avoid any risk at all…well, then we can enjoy ourselves kicking back and watching the rest of the world pass us by.