Politics

Reasons to Extend Unemployment Benefits

 

From the left, Ezra Klein: the Bush tax cuts certainly majorly increased the deficit [CBO], and it’s unfair for the GOP to demand that the unemployment extension be deficit-neutral.

Further, if tax cuts don’t need to be paid for because they generate so much taxable economic activity that they pay for themselves, then neither do unemployment checks. After all, the two work very similarly: A tax cut puts more money in your pocket. Unemployment insurance puts more money in an unemployed person’s pocket. The difference is that the unemployed person is likelier to spend that money, which will generate more taxable economic activity than if that money is saved. That’s why Mark Zandi, an adviser to John McCain’s presidential campaign, estimated (pdf) that a dollar spent extending the Bush tax cuts would generate .32 cents of taxable economic activity, while a dollar spent on unemployment benefits would generate $1.61 of taxable economic activity.

In other words, using the theory under which tax cuts pay for themselves, unemployment benefits are a lot likelier to pay for themselves. …

More reasons to extend them:

  • Ending benefits doesn’t magically create jobs
  • Among those who can’t find work, spending will drop to nothing, depressing local economies
  • Walked away from mortgages and desperately-liquidated assets will destroy tremendous amounts of long term value for short-term needs.

From the right, Megan McArdle:

…in recessions, the length of time for which people need “temporary” assistance stretches out. That means that the government has to respond with temporary benefit extensions. These aren’t just good for the people who are unemployed; it’s also good for us. Unemployment assistance is one of the “automatic fiscal stabilizers” that all but the most hard-nosed conservative economists agree help smooth the business cycle in modern industrial countries. Indeed, it’s one of the most effective forms of stimulus we have.

… [Not extending benefits would be] terrible economic policy–suddenly cutting off the taps would have nasty knock-on effects on the economy. And while it’s a lot of money, it’s one of the few government programs that pretty much unequivocally improve the net welfare of the American people. If Bunning wants to hold up something, how about finding some useless defense appropriations to complain about?

You Are Not So Smart

 

The Misconception: You are a rational, logical being who sees the world as it really is.

The Truth: You are as deluded as the rest of us, but that’s OK, it keeps you sane.

You Are Not So Smart is a blog devoted to self delusion and irrational thinking.

And it’s great.

The latest post is about on Subjective Validation, “a fancy way of saying you are far more vulnerable to suggestion when the subject of the conversation is you.”

The tendency to believe vague statements designed to appeal to just about anyone is called the Forer Effect, and psychologists point to this phenomenon to explain why people fall for pseudoscience like biorhythms, iridology and phrenology or mysticism like astrology, numerology and tarot cards.

The last was on Confirmation Bias, which explains the success of political echo chambers and why racism and xenophobia will always be with us; humans are wired to ignore evidence outside their preconceived beliefs.

In the last few years I’ve been taking stabs at my own confirmation bias, seeking out the best arguments and evidence from those I might be inclined to disagree with. While there are a tremendous number of pundits making baseless assertions, especially on the radio and television—mastery of confirmation bias is a winning strategy—there are just as many great writers and thinkers across the political spectrum with worthwhile arguments.

Other great posts:

  • The Just-World Fallacy – People don’t “get what they deserve”
  • Fines – The effect of removing the social cost of undesired behavior

Charter Cities seem better than foreign aid

 

The Atlantic has a great piece on Paul Romer and his push for “charter cities”. I agree completely with Romer that fair laws with economic liberties is the only way to support economic growth. While probably true in the old world, very few countries remain impoverished simply because of geography. Tyrants plague the people of North Korea; lawlessness, corrupt states, and trade-hostile laws impoverish many others. We should not end foreign aid where it’s needed, but charter cities sound like one of the only ways to make it uneeded.

California’s upcoming Cannabis ballot initiative

 

In November Californians will see on their ballot the Regulate, Control and Tax Cannabis Act of 2010. The act would basically “legalize” cannabis—all involved in such an industry would remain in violation of the federal Controlled Substances Act, and subject to the whims of the federal DEA and Dept. of Justice—for adults 21 and up, and set up some initial regulations on use, sale, cultivation, and transport. The act is fairly short and readable and seems like a reasonable initial regulatory structure to me.

The Good:

  • Could greatly reduce the prevalence of violent raids on private homes
  • Would keep otherwise-law-abiding adults out of the criminal justice system
  • Would reduce the wasteful use of treatment facilities on individuals just choosing treatment over jail
  • Would restore more respect for law enforcement
  • Home growing might greatly reduce the market value of cannabis, which might keep cannabis selling industries smaller, less able to lobby for looser regulations, and less able to afford expensive advertising campaigns. Ironically this act might make large-scale dispensaries—who funded the signature drive—less likely to exist.
  • The legitimization of cannabis could result in safer usage practices becoming the standard of use.
  • Local governments could add regulations to force sellers to provide safety information (e.g. how long impairment could last, how to recognize signs of trouble, recommending the use of vaporizers, harm research results)
  • Users who medically benefit from the drug (a small but non-zero percentage of CA’s current users) would have less trouble obtaining it.
  • Could significantly shrink black markets, including those that will continue to serve minors. E.g. A teen who can more easily steal pot from adult siblings or friends is less likely to seek out a dealer who may sell other drugs.
  • Could reduce alcohol use and associated violence and overdose deaths.
  • Could nudge Congress toward more reasonable cannabis laws and more federal research of cannabis (not just limited to harms).

The Bad:

  • Commercialization and legitimization will yield increases in the number of users (though in many parts of the state there are plenty of adult users).
  • Would make some law enforcement activities more difficult. E.g. users and sellers of harder drugs are often caught due to possession of marijuana, which is generally harder to conceal.
  • Home growing doesn’t nudge users toward safer delivery methods or place users in contact with someone who could theoretically provide helpful education/intervention. I say “theoretically” because California’s current policy creates too much incentive for doctors to be “pot docs”, who do little more than sell handwritten licenses.
  • Many users will simply combine pot use with alcohol use.
  • Even though it would remain illegal, driving under the influence of pot will probably rise. This is concerning, but the best available research is still pretty weak on the notion that casual usage creates significant danger. Pot users appear to be more aware of their impairment.
  • Will probably not yield of windfall of tax revenue for California
  • More people smoking things. Learning to smoke pot lessons the difficulty and foreignness of trying other smoked substances, which are generally more harmful than pot, including tobacco. If “spliffs”—cannabis with tobacco—became popular, this could lead to more tobacco smoking (which is proven to be carcinogenic) and more complicated addiction.

I still think the good outweighs the bad. Bring on the great democratic experiment!

HealthCare Thought Exercises

 

I can’t remember where, but I’m fairly certain I saw compelling evidence that nations with universal access to healthcare, contraceptives, and abortions have the lowest rates of abortions. Let’s assume this is true.

Also assume that the U.S. military, as well as foreign militaries aided by the U.S., engage in a perhaps small but non-zero number of actions which cause more human suffering, in lives and in residual physical and emotional scars, than the actions prevent.

Now assume that, ten years from now, ObamaCare will have reduced abortions by millions/year and have produced a net fiscal drain on the federal government, forcing it to reduce some of the aforementioned military actions.

Would it be a “moral” law?

I think the biggest leap here is assuming the federal govt. would cut military spending. More likely we’d see cuts targeting the weakest interests (the poor), and/or tax increases most significantly affecting the middle class.

Assume now that ObamaCare ends up raising significantly the net per capita cost of healthcare (cost of drugs, premiums, copays, taxes, etc.), and this effectively reduces the standard of living, particularly at the lower classes.

Also assume that ObamaCare results in the stifling of drug & medical product innovation, resulting in millions of avoidable deaths and suffering in the future.

Would it be a “moral” law?

What if FDR had successfully lobbied to get a national healthcare system established; and that U.S. medical innovation had progressed at a reduced rate since 1940 or so?

What if Republicans enacted a “free market” healthcare system which turned out to significantly reduce costs, but in doing so also reduced quality and the margin of profit available to go towards innovation? I.e. is a “cheap” healthcare system (which we certainly had before WWI) “better” than a costly one if the margins go towards preventing future suffering?

Is it fair to assume that in our costly system those margins do go towards “societally beneficial” innovation rather than, say, executive pockets and the development of expensive new drugs which are only slightly more effective than existing ones?

Shifting Morals and Shifting Laws

 

Blogger Classically Liberal shows how codifying the morality of the day (“societal justice”) can give you laws that abuse a slowly changing demographic of victims. With support of Christians, England at one time had criminalized homosexuality; but now that most brits openly accept it, England’s remaining Christians and their speech are becoming targets for abuse by today’s laws.

The desire to use the law to impose one’s morality has to be a human thing because it seems to have been pretty universal. Some have well-meaning reasoned intentions, but many want prohibitions simply because it’s wrong to let gays marry, use “drugs”, watch dirty movies, gamble, use alcohol, be gay, allow women to vote, marry out of race, education your slave… How morality shifts.

What if instead you had law based on the unchanging principle of positive personal liberty? Would society collapse in an orgy of sex, drugs, and Adult Swim marathons? We kinda tried this. The U.S. Constitution was radical in that it mostly limited the behavior of the government rather than of the individual, not that the Good Old Days of the U.S. were the golden age of personal liberty.

As the author of Last Call noted on Fresh Air, Prohibition was the first Amendment really limiting personal conduct, and we later got rid of it. I don’t drink, but I’ll have a sugary rum drink in celebration when DOMA falls.

Patent Absurdity

 

Don’t miss Patent Absurdity, a free half-hour documentary that “explores the case of software patents and the history of judicial activism that led to their rise, and the harm being done to software developers and the wider economy.”

When you open the page, the embedded video begins without human interaction, a violation of an Eolas patent. British Telecom tried to patent the hyperlink that took you to the page. The page probably results in transmission of a JPEG to your computer, a violation of a Forgent Networks patent. The browser you’re using is free in part because of the many patent-unencumbered open-source libraries and concepts its built upon: The concept of the “window” and the “tab”, the libraries that parse HTML, CSS, and Javascript and compress those resources over the wire; the TCP, IP, and HTTP protocols that made the internet bloom world-wide. The OS clipboard (“copy/paste”) that helped developers to build and reuse those libraries.

Had the modern interpretation of software patent law existed in the 60s, our computers, and the state of technology in general, might be very different. The clumsy technology in “Brazil” comes to mind.

With so much of the world’s economy and productivity now tied to software, the proliferation of software patents and worse—areas where those laws can apply—threatens to severely stifle innovation and funnel ever more of our resources into the pockets of law firms and of patent-trolling organizations that exist simply to extort from others.

On the FairTax

 

I’ve not read the original FairTax book, and have only flipped through the follow-up written to answer the critics, but I have spent many hours reading about it online over the years, and back when I listened to Boortz of course he pushed it. At the moment, I don’t see it as workable and I think its rollout could be disastrously disruptive to the economy. Many of the goals and incentives set up by the FT are good, but there are a number of critiques I’ve read more recently that have not been adequately answered IMO.

Primarily, there’s Bruce Bartlett’s excellent piece “Why the FairTax Won’t Work” (pdf). This should be the first stop for those who’ve only read pro-FT literature. It begins with a decent description of the FT, but obviously it shouldn’t be the only thing you read about the FT to make an informed opinion.

Several folks commenting at the Fair Tax Blog make some compelling arguments against the FT, including weighing in on Bartlett’s critique. Many agree with him that a VAT would be a better consumption tax. This post has some lively discussion worth reading.

A lot of the selling points of the FT just seem too good to be true:

  • You keep 100% of your paycheck. This is the most obvious deception—a mechanical truth of the FT system with the emotional appeal of effectively raising your income. Of course, your paycheck would be either be smaller or your expenses larger, too. With the FT’s guarantee of being revenue-neutral, the FT cannot be a win for everyone, and when you start to look at who would greatly benefit from it, it should be obvious who the losers will be. This is not to say that everyone’s current tax level is just, but this particular line of rhetoric seems targeted towards the middle class, who I think would end up paying more under the FT. And retirees living off savings—having already been taxed on earnings—will be taxed again to get by.
  • It’s under 200 pages. Does anyone really believe that suddenly Congress would just have no way of cutting breaks for special interests? The problems of loopholes, unfairness, and the ballooning of the tax code is due to the people who amend it, and the FT won’t replace them. With not even most Republicans willing to touch it, getting a FT through Congress would take a number of sweetheart deals right off the bat and probably provisions making it easier to tamper with going forward. Remember there would be $485B going to citizens yearly in “prebate” checks, and Congress would determine who gets what; more room for deal-cutting.
  • No more IRS! For those who strongly believe federal taxation is out-of-control, the notion of sticking it to the IRS will sound satisfying, but if a national consumption tax became the sole source of revenue for the federal government, you’d better believe it would build a new, huge bureaucracy to ensure compliance. Also, since the FT would no longer allow state and local governments tax-free purchasing, the states would likely need to jack up their income taxes to compensate.

Bartlett’s piece really is well-researched and a must-read, and if you know of a serious critique that takes on his arguments head-on, I’d love to read it.

It wasn’t torture when America did it.

 

Suuure. Salon’s Mark Benjamin on what our last Vice President has described as “a dunk in the water”. Disturbing.

Also looks like Obama’s (unsurprisingly) caving on civilian trials. Nothing says “rule of law” like pre-trial torture sessions and determining location and rule of court by political theater. KSM may be a mass murdering bastard, but aren’t we supposed to be better than regimes who use show trials? Don’t we usually sanction or invade regimes like that?