Thursday, March 01, 2007
New article posted
I have posted another article on SSRN, entitled Why Worldwide Welfare as a Normative Standard in U.S. Tax Policy? I actually wrote this article last August, and it will be appearing soon in the Tax Law Review, but I didn't realize until a friend pointed this out the other day that I hadn't posted it.
Monday, February 12, 2007
Fool me twice
It has been truly sickening and horrifying to watch the rollout of the Bush Administration's apparently planned war against Iran. You literally couldn't do more than these guys have to undermine their credibility by making such a reckless and false case for war in Iraq, followed by such stunning incompetence in the execution of the war. And you couldn't have more clearly demonstrated to the press that they should not simply be court stenographers, repeating what they're told as if it had any claim on being believed. Yet it is all happening again, with vague, undocumented, and less than credible assertions getting front page play all over the place.
Isn't it a little strange that, with the U.S. troops predominantly fighting Sunnis, the Bush Administration is blaming the Iranians? I'm not convinced Bush knows that the Iranians actually support the Shiites in Iraq, who control the government there and actually are fighting against the Sunnis, but you'd think others, including the press, would keep this point more clearly in mind.
I suspect that, if the Administration wanted to make a case for war against Saudi Arabia, it could come up with something fifty times stronger than what they are throwing at the Iranians, given the Saudis' position in the Iraqi civil war and where we stand in the middle of it. How many times have American troops been attacked with Saudi-supplied weapons, which of course need not have come directly from the Saudi government?
The nightmare that happens twice can be powerful artistically - think Hitchcock's Vertigo - but it is nauseating to live through.
UPDATE: As detailed here, Michael Gordon, the New York Times "reporter" who wrote Saturday's breathless, unsourced, and undocumented front-page story, both (a) was Judy Miller's co-author on some of the most egregiously false stories from the Iraq war run-up, and (b) is an avowed public supporter of the "surge."
Isn't it a little strange that, with the U.S. troops predominantly fighting Sunnis, the Bush Administration is blaming the Iranians? I'm not convinced Bush knows that the Iranians actually support the Shiites in Iraq, who control the government there and actually are fighting against the Sunnis, but you'd think others, including the press, would keep this point more clearly in mind.
I suspect that, if the Administration wanted to make a case for war against Saudi Arabia, it could come up with something fifty times stronger than what they are throwing at the Iranians, given the Saudis' position in the Iraqi civil war and where we stand in the middle of it. How many times have American troops been attacked with Saudi-supplied weapons, which of course need not have come directly from the Saudi government?
The nightmare that happens twice can be powerful artistically - think Hitchcock's Vertigo - but it is nauseating to live through.
UPDATE: As detailed here, Michael Gordon, the New York Times "reporter" who wrote Saturday's breathless, unsourced, and undocumented front-page story, both (a) was Judy Miller's co-author on some of the most egregiously false stories from the Iraq war run-up, and (b) is an avowed public supporter of the "surge."
Sunday, February 11, 2007
New and old music
It's nice, and even downright encouraging, to see a pleasant little indie band like the Shins in the Billboard Top Ten - # 8 this week, after being # 2 last week. I like the album and have played it a number of times, although it seems to shut the door on the thought that the Shins might actually make it to the top ranks artistically. Hard to see why it took them so long (about the same time between this album & the previous one as between Sergeant Pepper and With the Beatles). But still, albums I'd actually listen to don't often land so high on the charts. Leaving aside Dylan's latest, which though tame is a tribute not just to his 1960s career but to the fact that Love & Theft (released in 2001) was so good.
Other recent listens show my vintage a bit more, I guess. I had never gotten a CD of the Clash's first album, although I had a tape for years & recall walking around the Bronx with my brother back in the day so he could find an import copy (this being before the US release). Still great. Stevie Wonder's Innervisions, another 1970s album I'd never gotten as a CD, is also pretty good if a bit more dated. The Velvet Underground Live 1993 is disappointingly tame. It's certainly odd to hear these guys strike up, say, Venus in Furs & hear the crowd cheering as if it had been some Top Ten hit of their youth instead of selling 2,000 copies or whatever. I decided to try the 1993 live album because the Velvets' three live double albums from 1969-70 (Quine, Max's, 1969) are all so great, but in those days they actually owned the songs rather than being a covers/revival band.
Other recent listens show my vintage a bit more, I guess. I had never gotten a CD of the Clash's first album, although I had a tape for years & recall walking around the Bronx with my brother back in the day so he could find an import copy (this being before the US release). Still great. Stevie Wonder's Innervisions, another 1970s album I'd never gotten as a CD, is also pretty good if a bit more dated. The Velvet Underground Live 1993 is disappointingly tame. It's certainly odd to hear these guys strike up, say, Venus in Furs & hear the crowd cheering as if it had been some Top Ten hit of their youth instead of selling 2,000 copies or whatever. I decided to try the 1993 live album because the Velvets' three live double albums from 1969-70 (Quine, Max's, 1969) are all so great, but in those days they actually owned the songs rather than being a covers/revival band.
Law reviews vs. economics journals
One thing economists are always amazed about, when they talk to law professors, is the way that law review publication is handled. Leaving aside the special-topic faculty-edited journals (e.g., Tax Law Review at NYU, Journal of Legal Studies at the U of Chicago), the law reviews are of course student-edited. More specifically, by second-years who have newly been selected to editorial positions. Important decisions, in terms of junior law profs' careers, what gets read, who has the buzz, etc., then end up being made by these individuals, who, with no criticism intended, are not very far along yet in terms of the background needed to recognize serious, good, or important work.
Lucky for me, I've almost completely stayed out of the law reviews' way for almost a decade, what with books and invited pieces. But at the end of this month, when the new boards have been installed, I'm planning to submit "Beyond the Pro-Consumption Tax Consensus," significantly revised for greater clarity and readability since I posted it on SSRN (and linked it here) about a month ago. I actually do feel that this is an important article in the tax policy lit, and also a good one. We will see if this view ends up being shared by the people who get to decide.
Knowing that you have law review readers making publication decisions can have bad effects. It can simply be boring to have to go through the ABC's of ideas that your main target audience will already know about. But okay, it's actually a good discipline, up to a point, to force yourself to communicate more broadly. The problem is that it creates over-long detours. Sometimes it means you can't make an interesting & significant side-point since it would take 5 pages to set the stage for it. Worse is the incentive to have to sell articles' conclusions as extra-significant, and to tart them up in stupid ways so people who don't know the field that well will think they should publish it. "This is the first article to show that 1 + 1 = 2, a point that will transform the law and economics of arithmetic." One strategy I've heard about is putting these claims in the version you send out, then taking it out before publication so that your peers won't laugh at you.
Another bad incentive, the man bites dog scenario, isn't limited to law reviews. Perhaps it's even more true for professionally edited economics journals. If you can devise a study showing that 1 + 1 actually equals 3, you're in clover. The moment you get that finding from your regressions, but only if you get that result, you know you have a publishable paper. (Econ journals won't publish a paper confirming that 1 + 1 = 2.) Luckily, most reputable empirical economists are honorable, plus they do have to worry about reviewers asking for back up data runs.
Rare instance of thinking that the law reviews sometimes aren't as bad came from last Thursday's Tax Policy Colloquium at NYU, where Dhammika Dharmapala presented a paper (co-authored with Mihir Desai) finding that well-managed firms get more of a boost in stock price from tax savings than do poorly-managed firms, suggesting the possibility that the market expects the managers in poorly managed firms to loot or dissipate more of the tax savings. In some ways, the theoretical story wasn't that strong (since the effect would depend, not on total looting or waste, but on extra marginal looting or waste when extra tax savings emerge). Also, one could criticize the methodologies used for two key empirical components of the analysis. First, they tried to identify tax planning via gaps between tax and book income. But deliberate and systematic gaps between the two can reflect either tax planning or earnings management. It was unclear that their methodology for identifying the latter could do the job well enough. (Which is not to say that the authors overlooked a better way of doing it - the point is simply that they're very hard to distinguish). Second, the paper's proxy for well-managed firms, which was higher-than-average ownership by institutional investors, was theoretically questionable since it's unclear how much these investors actually improve governance. This device also causes big endogeneity problems (i.e., we might be picking up some aspect of how the institutional investors pick firms or directly influence stock prices).
In the paper as it stands, Dharmapala & Desai mention a robustness check for their governance finding, which is that the results are the same if one uses a governance measure relating to institutional mechanisms for managerial entrenchment. This, in general, is the really good thing about their paper - questionable though the results seem since they are so distantly and indirectly related to the underlying things of interest, the results are not only statistically significant but apparently quite robust to alternative specifications. So something has to lie behind their findings, and although we spent much of Thursday at the colloquium spinning alternative stories that would explain the data, in the end they really seem to have something.
But back to the law reviews versus econ journals. The authors may actually agree with us about the better way to test for well-managed firms, via the entrenchment measures that don't give rise to comparably serious endogeneity problems. But the reviewers at the journal that will likely be publishing the paper made them switch.
Not a problem one ordinarily has with student law review editors, with whom it's often more a matter of negotiating over whether you need a footnote for the claim made in passing that 1 + 1 = 2. So score one for the law review process.
Lucky for me, I've almost completely stayed out of the law reviews' way for almost a decade, what with books and invited pieces. But at the end of this month, when the new boards have been installed, I'm planning to submit "Beyond the Pro-Consumption Tax Consensus," significantly revised for greater clarity and readability since I posted it on SSRN (and linked it here) about a month ago. I actually do feel that this is an important article in the tax policy lit, and also a good one. We will see if this view ends up being shared by the people who get to decide.
Knowing that you have law review readers making publication decisions can have bad effects. It can simply be boring to have to go through the ABC's of ideas that your main target audience will already know about. But okay, it's actually a good discipline, up to a point, to force yourself to communicate more broadly. The problem is that it creates over-long detours. Sometimes it means you can't make an interesting & significant side-point since it would take 5 pages to set the stage for it. Worse is the incentive to have to sell articles' conclusions as extra-significant, and to tart them up in stupid ways so people who don't know the field that well will think they should publish it. "This is the first article to show that 1 + 1 = 2, a point that will transform the law and economics of arithmetic." One strategy I've heard about is putting these claims in the version you send out, then taking it out before publication so that your peers won't laugh at you.
Another bad incentive, the man bites dog scenario, isn't limited to law reviews. Perhaps it's even more true for professionally edited economics journals. If you can devise a study showing that 1 + 1 actually equals 3, you're in clover. The moment you get that finding from your regressions, but only if you get that result, you know you have a publishable paper. (Econ journals won't publish a paper confirming that 1 + 1 = 2.) Luckily, most reputable empirical economists are honorable, plus they do have to worry about reviewers asking for back up data runs.
Rare instance of thinking that the law reviews sometimes aren't as bad came from last Thursday's Tax Policy Colloquium at NYU, where Dhammika Dharmapala presented a paper (co-authored with Mihir Desai) finding that well-managed firms get more of a boost in stock price from tax savings than do poorly-managed firms, suggesting the possibility that the market expects the managers in poorly managed firms to loot or dissipate more of the tax savings. In some ways, the theoretical story wasn't that strong (since the effect would depend, not on total looting or waste, but on extra marginal looting or waste when extra tax savings emerge). Also, one could criticize the methodologies used for two key empirical components of the analysis. First, they tried to identify tax planning via gaps between tax and book income. But deliberate and systematic gaps between the two can reflect either tax planning or earnings management. It was unclear that their methodology for identifying the latter could do the job well enough. (Which is not to say that the authors overlooked a better way of doing it - the point is simply that they're very hard to distinguish). Second, the paper's proxy for well-managed firms, which was higher-than-average ownership by institutional investors, was theoretically questionable since it's unclear how much these investors actually improve governance. This device also causes big endogeneity problems (i.e., we might be picking up some aspect of how the institutional investors pick firms or directly influence stock prices).
In the paper as it stands, Dharmapala & Desai mention a robustness check for their governance finding, which is that the results are the same if one uses a governance measure relating to institutional mechanisms for managerial entrenchment. This, in general, is the really good thing about their paper - questionable though the results seem since they are so distantly and indirectly related to the underlying things of interest, the results are not only statistically significant but apparently quite robust to alternative specifications. So something has to lie behind their findings, and although we spent much of Thursday at the colloquium spinning alternative stories that would explain the data, in the end they really seem to have something.
But back to the law reviews versus econ journals. The authors may actually agree with us about the better way to test for well-managed firms, via the entrenchment measures that don't give rise to comparably serious endogeneity problems. But the reviewers at the journal that will likely be publishing the paper made them switch.
Not a problem one ordinarily has with student law review editors, with whom it's often more a matter of negotiating over whether you need a footnote for the claim made in passing that 1 + 1 = 2. So score one for the law review process.
Tuesday, January 23, 2007
The Urban Institute on Bush's healthcare plan
I would pretty much endorse the entire statement here, from the Brookings-Urban Tax Policy Center (easily available via google search). Much closer to my views than, say, Krugman's denunciation of the plan.
Anyway, herewith their summary statement about it (from the abstract for a longer discussion):
In his State of the Union address, President Bush will propose to replace most current tax exclusions and deductions for health insurance premiums and out-of-pocket costs with a new $15,000 standard deduction ($7,500 for single people) in the federal income tax-as well as an exemption from payroll taxes-for all taxpayers who obtain qualifying health insurance. The plan would eliminate the current bias in favor of health insurance obtained through employers, provide tax incentives for the purchase of health insurance in the private market, and reduce current tax incentives to over-spend on healthcare services. As designed, the proposal would be revenue neutral over ten years, after which it would generate a growing stream of revenue.
The innovative plan is a major step toward improving the efficiency of the market for health insurance. By severing the link between work and insurance, it would offer everyone the same tax incentives to obtain insurance coverage and limit spending on health care. Whether it would succeed in meeting its objectives in a fair way is less clear.
The new tax incentives will help some individuals to gain coverage. But they could also lead employers, particularly those in small firms, to discontinue health plans for their workers, some of whom would end up without insurance. Furthermore, by relying on tax deductions, the plan would continue to provide the largest benefits to high-income taxpayers and offer little or no financial incentive for low-income people who most need help paying for insurance. The plan would encourage states to shift existing funds to subsidize insurance for people with low incomes and chronic health conditions, but those funds could well be too small to be effective.
Changes to the President's proposal could improve its chances of success:
* Replacing the deduction with a refundable credit or voucher would provide more assistance to low-income families, increasing coverage and improving progressivity.
* Requiring that qualifying insurance plans offer community-rated premiums would help to assure the availability of affordable coverage for people regardless of their health status.
* Providing additional funds for complementary programs like Medicaid and SCHIP would help to provide coverage for low-income families and children.
* Explicitly mandating individuals to purchase health insurance, in combination with adequate subsidies for those with low incomes, would increase coverage and reduce adverse selection.
* Eliminating tax subsidies for health savings accounts would remove a bias in favor of those accounts that would otherwise exist.
* Indexing the deduction to the health CPI or even the rate of change in overall health spending would maintain its value over time, albeit at the cost of lost revenue.
Despite its limitations, the President's plan marks an encouraging step in the right direction. With appropriate modifications, it could expand health insurance coverage and improve market efficiency.
[BACK TO ME]: All this being said, it's just pure silliness for anyone to pay much attention to Bush's proposals on any domestic matters - as if he actually cared about any of this stuff, or had the clout to do anything even if he did care. You can't play the sorts of shenanigans he has over the past 6 years and then say "guess what, I'm turning over a new leaf and you guys should start voluntarily doing what I say." BUT, his healthcare proposal may matter in the future as a not-insane Republican guidepost that could actually play a role in a genuine policymaking process. Bad proposals certainly, but one would hope not entirely bad ones as well, never actually die any more than Michael Myers does in the Halloween movies.
Anyway, herewith their summary statement about it (from the abstract for a longer discussion):
In his State of the Union address, President Bush will propose to replace most current tax exclusions and deductions for health insurance premiums and out-of-pocket costs with a new $15,000 standard deduction ($7,500 for single people) in the federal income tax-as well as an exemption from payroll taxes-for all taxpayers who obtain qualifying health insurance. The plan would eliminate the current bias in favor of health insurance obtained through employers, provide tax incentives for the purchase of health insurance in the private market, and reduce current tax incentives to over-spend on healthcare services. As designed, the proposal would be revenue neutral over ten years, after which it would generate a growing stream of revenue.
The innovative plan is a major step toward improving the efficiency of the market for health insurance. By severing the link between work and insurance, it would offer everyone the same tax incentives to obtain insurance coverage and limit spending on health care. Whether it would succeed in meeting its objectives in a fair way is less clear.
The new tax incentives will help some individuals to gain coverage. But they could also lead employers, particularly those in small firms, to discontinue health plans for their workers, some of whom would end up without insurance. Furthermore, by relying on tax deductions, the plan would continue to provide the largest benefits to high-income taxpayers and offer little or no financial incentive for low-income people who most need help paying for insurance. The plan would encourage states to shift existing funds to subsidize insurance for people with low incomes and chronic health conditions, but those funds could well be too small to be effective.
Changes to the President's proposal could improve its chances of success:
* Replacing the deduction with a refundable credit or voucher would provide more assistance to low-income families, increasing coverage and improving progressivity.
* Requiring that qualifying insurance plans offer community-rated premiums would help to assure the availability of affordable coverage for people regardless of their health status.
* Providing additional funds for complementary programs like Medicaid and SCHIP would help to provide coverage for low-income families and children.
* Explicitly mandating individuals to purchase health insurance, in combination with adequate subsidies for those with low incomes, would increase coverage and reduce adverse selection.
* Eliminating tax subsidies for health savings accounts would remove a bias in favor of those accounts that would otherwise exist.
* Indexing the deduction to the health CPI or even the rate of change in overall health spending would maintain its value over time, albeit at the cost of lost revenue.
Despite its limitations, the President's plan marks an encouraging step in the right direction. With appropriate modifications, it could expand health insurance coverage and improve market efficiency.
[BACK TO ME]: All this being said, it's just pure silliness for anyone to pay much attention to Bush's proposals on any domestic matters - as if he actually cared about any of this stuff, or had the clout to do anything even if he did care. You can't play the sorts of shenanigans he has over the past 6 years and then say "guess what, I'm turning over a new leaf and you guys should start voluntarily doing what I say." BUT, his healthcare proposal may matter in the future as a not-insane Republican guidepost that could actually play a role in a genuine policymaking process. Bad proposals certainly, but one would hope not entirely bad ones as well, never actually die any more than Michael Myers does in the Halloween movies.
Wednesday, January 17, 2007
Cost of the Iraq war
The New York Times has an article today based on the cost of the Iraq war, which to this point stands at $1.2 trillion. The article notes that people have a hard time really grasping big numbers, so it's difficult to evaluate what this actually means. But one can think of it in terms of alternative uses for the same funds.
For example, it would cost less than half as much to engage for ten years in: "an unprecedented public health campaign — a doubling of cancer research funding, treatment for every American whose diabetes or heart disease is now going unmanaged and a global immunization campaign to save millions of children’s lives."
Good point, but here's another way to make the dollar cost easy to grasp. It's a lot crasser, but perhaps all the more salient for that. Since the U.S. population is about 300 million and we are going to pay for it eventually (I call this the no-free-lunch principle), Bush's going to war is fiscally equivalent to his having charged each U.S. citizen an average of $4,000.
That's $16,000 for a four-person household such as mine, ignoring that we'll probably pay more than our per capita share due to being above the mean in affluence.
Glad to know that I have personally, in effect, paid more than $16,000 for all this.
For example, it would cost less than half as much to engage for ten years in: "an unprecedented public health campaign — a doubling of cancer research funding, treatment for every American whose diabetes or heart disease is now going unmanaged and a global immunization campaign to save millions of children’s lives."
Good point, but here's another way to make the dollar cost easy to grasp. It's a lot crasser, but perhaps all the more salient for that. Since the U.S. population is about 300 million and we are going to pay for it eventually (I call this the no-free-lunch principle), Bush's going to war is fiscally equivalent to his having charged each U.S. citizen an average of $4,000.
That's $16,000 for a four-person household such as mine, ignoring that we'll probably pay more than our per capita share due to being above the mean in affluence.
Glad to know that I have personally, in effect, paid more than $16,000 for all this.
Tuesday, January 16, 2007
A review of my (unpublished) novel
Hope I am not violating any confidences here, or being unduly self-serving. (The barest bit self-serving I see no need to apologize for.) Someone I know who read my unpublished novel "Getting It" sent me these thoughts, which I believe the writer does not plan to use and that I can pass on so long as he/she is not identified. Anyway, here goes:
Who’s not sick and tired of short stories, novels, sitcoms, and movies with or about lawyers? And then, here comes Daniel Shaviro with a fresh, amazing, and so literary novel entitled “Getting It.” I must say, reading it during the long MLK weekend – when we probably are not supposed to be so happy about the world - it really made my weekend!
First of all, the writing is flawless, and I suspect, in my total ignorance of his previous literary sins, that Shaviro made his way to such a skill through many other works that I don’t know anything about. [Not so, actually, unless you count books and articles on my law and policy interests. – DS]
OK, a novel that takes place in the environment of a leading law firm, with a lot of “legal lingo." However, Daniel makes it very easy for the lay person to understand even the most “professional” implications. Cleverly enough, he places his action in 1984, before Shepard’s was online—which gives him the opportunity to explain the reader what “Shepardizing a case” is. He does this in a very natural way, without creating too many asides from the plot, here and with other legal or legal research matters, explaining terminology and approaches as needed. Therefore the novel appeals to a variety of readers. As far as I was concerned, I couldn’t let it go, once I started to be captivated by the plot. Three associates (Doberman, Stellworth, and Porter) are running for the only open spot to make partner, and have to prove that they deserve it to one of the senior partners (Crossley). All this would be done through ways and means determined by their own qualities and shortcomings, by their distinctive personalities. Shaviro plays a kind of mathematical/geometrical game here. He describes his characters in a parallel way (e.g., the way each is perceived by the law firm secretaries; their arts interests and family values, etc), but then he cuts it short with an amazing couple of sentences: “Crossley hated everyone there, including himself. Doberman and Stellworth each hated everyone except himself. Porter hated himself.”
Well, this happens on page 11, and then there are more than 200 pages to prove it. And, yes, it’s true! Intrigues, hide-and-seek, manipulation, some remarkable women figures (Lyla, Gidget, Janet) -- everything develops at a very balanced pace, in a novel that goes beyond the inner circle of the players, attempting to say something more general about society, rotten characters, ambitions, but also about humble people (who may be full of potential, but not aggressive and ruthless, such as Porter) . The tone is sympathetically-cynical, in an original manner, reminding sometimes the best of Philip Roth or Thomas Wolfe. The sense of humor is dry, rather British, and involves references that range from the classics to popular culture. In the end, the most complex character proves to be Doberman, a unique texture of intelligence, ambition, ruthlessness, lack of feelings, and selfishness. He is the true hero of our times! Don’t forget, though, all this happened more than 20 years ago.
But, then, what is 20 years in History?
This novel that does not show the typical hesitations or uncertainties of a first-timer. The emotional tension is nerve-racking, the psychological insight deep and convincing. Shaviro masters both the colloquial dialogue and the parallel storytelling, which in the end is unified by the verdict. “As the ancient Greeks had the Mysteries of Eleusis, so Asby & Cinders had its annual partnership meeting.” [Plot details omitted - DS.]
No moral, whatsoever, but maybe a hint that manipulation, bad faith, selfishness, and egomania do not always pay in the end.
Who’s not sick and tired of short stories, novels, sitcoms, and movies with or about lawyers? And then, here comes Daniel Shaviro with a fresh, amazing, and so literary novel entitled “Getting It.” I must say, reading it during the long MLK weekend – when we probably are not supposed to be so happy about the world - it really made my weekend!
First of all, the writing is flawless, and I suspect, in my total ignorance of his previous literary sins, that Shaviro made his way to such a skill through many other works that I don’t know anything about. [Not so, actually, unless you count books and articles on my law and policy interests. – DS]
OK, a novel that takes place in the environment of a leading law firm, with a lot of “legal lingo." However, Daniel makes it very easy for the lay person to understand even the most “professional” implications. Cleverly enough, he places his action in 1984, before Shepard’s was online—which gives him the opportunity to explain the reader what “Shepardizing a case” is. He does this in a very natural way, without creating too many asides from the plot, here and with other legal or legal research matters, explaining terminology and approaches as needed. Therefore the novel appeals to a variety of readers. As far as I was concerned, I couldn’t let it go, once I started to be captivated by the plot. Three associates (Doberman, Stellworth, and Porter) are running for the only open spot to make partner, and have to prove that they deserve it to one of the senior partners (Crossley). All this would be done through ways and means determined by their own qualities and shortcomings, by their distinctive personalities. Shaviro plays a kind of mathematical/geometrical game here. He describes his characters in a parallel way (e.g., the way each is perceived by the law firm secretaries; their arts interests and family values, etc), but then he cuts it short with an amazing couple of sentences: “Crossley hated everyone there, including himself. Doberman and Stellworth each hated everyone except himself. Porter hated himself.”
Well, this happens on page 11, and then there are more than 200 pages to prove it. And, yes, it’s true! Intrigues, hide-and-seek, manipulation, some remarkable women figures (Lyla, Gidget, Janet) -- everything develops at a very balanced pace, in a novel that goes beyond the inner circle of the players, attempting to say something more general about society, rotten characters, ambitions, but also about humble people (who may be full of potential, but not aggressive and ruthless, such as Porter) . The tone is sympathetically-cynical, in an original manner, reminding sometimes the best of Philip Roth or Thomas Wolfe. The sense of humor is dry, rather British, and involves references that range from the classics to popular culture. In the end, the most complex character proves to be Doberman, a unique texture of intelligence, ambition, ruthlessness, lack of feelings, and selfishness. He is the true hero of our times! Don’t forget, though, all this happened more than 20 years ago.
But, then, what is 20 years in History?
This novel that does not show the typical hesitations or uncertainties of a first-timer. The emotional tension is nerve-racking, the psychological insight deep and convincing. Shaviro masters both the colloquial dialogue and the parallel storytelling, which in the end is unified by the verdict. “As the ancient Greeks had the Mysteries of Eleusis, so Asby & Cinders had its annual partnership meeting.” [Plot details omitted - DS.]
No moral, whatsoever, but maybe a hint that manipulation, bad faith, selfishness, and egomania do not always pay in the end.
Tuesday, January 09, 2007
My favorite quote from today's NY Times
From the article about the PR roll-out of Bush's surge, AKA escalation, AKA the New Way Forward:
“It’s not just one speech,” the official said. “This is so complicated you couldn’t do it all in one speech. So there will be an ongoing and sustained effort to educate the American people.”
Wow. I'm really going to have to work hard to understand everything the Prez is doing. Hope he stays patient with us all. Maybe I should stay in tomorrow night, because if I miss The Speech, I'll be behind an' everything.
UPDATE: My wife says no problem; we can just ask for Surge Help on Thursday morning if we need it.
“It’s not just one speech,” the official said. “This is so complicated you couldn’t do it all in one speech. So there will be an ongoing and sustained effort to educate the American people.”
Wow. I'm really going to have to work hard to understand everything the Prez is doing. Hope he stays patient with us all. Maybe I should stay in tomorrow night, because if I miss The Speech, I'll be behind an' everything.
UPDATE: My wife says no problem; we can just ask for Surge Help on Thursday morning if we need it.
Sunday, January 07, 2007
Two new articles posted at SSRN
I have posted two new articles at the SSRN download site. The first is a substantially revised version of a paper I posted some months back that, at the time, was mostly about income averaging. This time, I'm hunting somewhat bigger game. Title, link, and abstract are as follows:
Beyond the Pro-Consumption Tax Consensus.
In the last two decades, the dominant norm in fundamental tax reform has shifted from income taxation to consumption taxation, among academics no less than policymakers. Few have recognized, however, that the case for a consumption tax overlaps substantially with that for lifetime income averaging, an idea that has drawn considerably less support. Likewise, few have recognized that the grounds for unease about the case for income averaging (as an ideal system, leaving aside administrative concerns) apply equally to the case for consumption taxation.
Within a welfare economics framework, the case for both norms is close to irrefutable if one makes three key assumptions: that markets are complete, that individuals engage in consistent rational choice given their preferences, and that the only relevant information about taxpayer "ability" is that provided by an undifferentiated measure of lifetime earnings. Where these assumptions fail to hold, (1) allowing income averaging between periods may be undesirable, (2) the case for a consumption tax becomes less clearcut, and (3) as revealed by the "new dynamic public finance" literature in economics, there may actually be a strong rationale for taxing saving.
The second article is a piece I wrote for a conference at tax and corporate governance that I attended in Munich last month. Title, link, and abstract are as follows:
Disclosure and Civil Penalty Rules in the U.S. Legal Response to Corporate Tax Shelters.
This paper, written for a European conference on tax and corporate governance, evaluates two aspects of the U.S. legal response to corporate tax shelters: the civil penalty rules and the disclosure rules. It argues that, while the disclosure rules do not impose undue burdens, their usefulness to the IRS is limited by the difficulty of steering between the twin dangers of under-disclosure (permitting taxpayers to conceal close cousins of reportable transactions) and over-disclosure (creating information overload for the IRS). Thus, expanded reporting requirements with respect to book-tax differences in income accounting are likely to prove more useful to the IRS.
With respect to penalties, the paper argues that the rules' main flaw is excessive reliance on taxpayer good faith, which induces shopping around for "penalty shield" opinions from tax lawyers. To address this problem and create a better set of incentives in the "audit lottery," the paper argues for no-fault civil penalties, with penalty insurance serving to address any concerns about the proportionality of sanctions imposed on risk-averse taxpayers who may have been acting in good faith.
Beyond the Pro-Consumption Tax Consensus.
In the last two decades, the dominant norm in fundamental tax reform has shifted from income taxation to consumption taxation, among academics no less than policymakers. Few have recognized, however, that the case for a consumption tax overlaps substantially with that for lifetime income averaging, an idea that has drawn considerably less support. Likewise, few have recognized that the grounds for unease about the case for income averaging (as an ideal system, leaving aside administrative concerns) apply equally to the case for consumption taxation.
Within a welfare economics framework, the case for both norms is close to irrefutable if one makes three key assumptions: that markets are complete, that individuals engage in consistent rational choice given their preferences, and that the only relevant information about taxpayer "ability" is that provided by an undifferentiated measure of lifetime earnings. Where these assumptions fail to hold, (1) allowing income averaging between periods may be undesirable, (2) the case for a consumption tax becomes less clearcut, and (3) as revealed by the "new dynamic public finance" literature in economics, there may actually be a strong rationale for taxing saving.
The second article is a piece I wrote for a conference at tax and corporate governance that I attended in Munich last month. Title, link, and abstract are as follows:
Disclosure and Civil Penalty Rules in the U.S. Legal Response to Corporate Tax Shelters.
This paper, written for a European conference on tax and corporate governance, evaluates two aspects of the U.S. legal response to corporate tax shelters: the civil penalty rules and the disclosure rules. It argues that, while the disclosure rules do not impose undue burdens, their usefulness to the IRS is limited by the difficulty of steering between the twin dangers of under-disclosure (permitting taxpayers to conceal close cousins of reportable transactions) and over-disclosure (creating information overload for the IRS). Thus, expanded reporting requirements with respect to book-tax differences in income accounting are likely to prove more useful to the IRS.
With respect to penalties, the paper argues that the rules' main flaw is excessive reliance on taxpayer good faith, which induces shopping around for "penalty shield" opinions from tax lawyers. To address this problem and create a better set of incentives in the "audit lottery," the paper argues for no-fault civil penalties, with penalty insurance serving to address any concerns about the proportionality of sanctions imposed on risk-averse taxpayers who may have been acting in good faith.
Thursday, January 04, 2007
Foolishness from the left
George Will raised hackles today around the left blogosphere with a Washington Post op-ed saying that the minimum wage should be abolished. I'd have to say, I lean towards his side on this one.
The reasons I only lean rather than definitvely stand that way are twofold. First, while I think one would basically have to be a moron not to favor trading in the minimum wage for government-provided wage subsidies if this were politically feasible, it isn't. Also, the minimum wage can improve distirbution. As a forced cartel of low-wage workers, it can potentially increase the overall income of the cartel participants. Only, rather than sharing the extra $$ among members like OPEC in its glory days, you get winners (people whose jobs end up with higher wages) and losers (thuse who lose jobs). Second, while from a standard neoclassical view the disemployment effect should be clearcut, in truth the labor market is a bit more complicated and has various odd quirks (e.g., employers choosing between lower-wage, higher-turnover and higher-wage, lower-turnover equilibria). I discuss a lot of this, along with the still-controversial Card-Krueger empirical work showing no detectable job loss, in a 1995 article that I published in the University of Chicago Law Review.
A couple of more points on the progressivity angle. The subsidy is geared to people based on hourly wage not household circumstances. So you get, e.g., teenagers from affluent households getting a lot of the $$. I think of it as conceptually a wage subsidy to low-hourly-wage workers, financed by a tax on commodities produced with low-wage labor. Not the design one would really want in a wage subsidy program that was being designed from any coherent set of criteria grounded in efficiency or distributional concerns. Note also that if, say, it ends up increasing consumer prices for commodities produced with low-wage labor (e.g., fast food), then it's a bit like a retail sales tax targeted at consumer goods that poor people disproportionately buy.
So I am not a big fan, and indeed I'm closer to George Will on this than that statement alone would suggest, although, yes, he is too simplistic about it.
But then again, look who's talking about simplistic if we bring the left blogosphere into this. Let's try Kevin Drum, who says, in supposed rebuke of Will, that workers aren't "commodities." This apparently is meant to be a moral statement of some obscure kind. Hard to rebut an ostensible argument that does not state anything coherent or rooted in consequentialism (i.e., in assessing what a minimum wage will actually do).
Kevin also says: "A rich society really has no excuse for not setting bare minimum levels of decency for all human interactions, including those between employer and employee."
Meaning, I suppose, that it's fine if someone doesn't get a job and is worse off due to the minimum wage - we regulate the job market interaction and care specially about it even if the consequences of our special treatment are Pareto-minimal, i.e., someone is left worse off and no one better off.
Not a very thoughtful post, from an individual I sometimes agree with. Makes me wonder a bit.
Irrefutable problem with his entire line of argument: he fails to recognize the central importance of an empirical, rather than logical, consideration: the question of what (and how great) are the disemployment effects of the minimum wage (at various levels). This remains inadequately understood. I really fail to see how anyone with half a brain can have so cocksure a view about the minimum wage without better knowledge about this question than any of us really has.
The reasons I only lean rather than definitvely stand that way are twofold. First, while I think one would basically have to be a moron not to favor trading in the minimum wage for government-provided wage subsidies if this were politically feasible, it isn't. Also, the minimum wage can improve distirbution. As a forced cartel of low-wage workers, it can potentially increase the overall income of the cartel participants. Only, rather than sharing the extra $$ among members like OPEC in its glory days, you get winners (people whose jobs end up with higher wages) and losers (thuse who lose jobs). Second, while from a standard neoclassical view the disemployment effect should be clearcut, in truth the labor market is a bit more complicated and has various odd quirks (e.g., employers choosing between lower-wage, higher-turnover and higher-wage, lower-turnover equilibria). I discuss a lot of this, along with the still-controversial Card-Krueger empirical work showing no detectable job loss, in a 1995 article that I published in the University of Chicago Law Review.
A couple of more points on the progressivity angle. The subsidy is geared to people based on hourly wage not household circumstances. So you get, e.g., teenagers from affluent households getting a lot of the $$. I think of it as conceptually a wage subsidy to low-hourly-wage workers, financed by a tax on commodities produced with low-wage labor. Not the design one would really want in a wage subsidy program that was being designed from any coherent set of criteria grounded in efficiency or distributional concerns. Note also that if, say, it ends up increasing consumer prices for commodities produced with low-wage labor (e.g., fast food), then it's a bit like a retail sales tax targeted at consumer goods that poor people disproportionately buy.
So I am not a big fan, and indeed I'm closer to George Will on this than that statement alone would suggest, although, yes, he is too simplistic about it.
But then again, look who's talking about simplistic if we bring the left blogosphere into this. Let's try Kevin Drum, who says, in supposed rebuke of Will, that workers aren't "commodities." This apparently is meant to be a moral statement of some obscure kind. Hard to rebut an ostensible argument that does not state anything coherent or rooted in consequentialism (i.e., in assessing what a minimum wage will actually do).
Kevin also says: "A rich society really has no excuse for not setting bare minimum levels of decency for all human interactions, including those between employer and employee."
Meaning, I suppose, that it's fine if someone doesn't get a job and is worse off due to the minimum wage - we regulate the job market interaction and care specially about it even if the consequences of our special treatment are Pareto-minimal, i.e., someone is left worse off and no one better off.
Not a very thoughtful post, from an individual I sometimes agree with. Makes me wonder a bit.
Irrefutable problem with his entire line of argument: he fails to recognize the central importance of an empirical, rather than logical, consideration: the question of what (and how great) are the disemployment effects of the minimum wage (at various levels). This remains inadequately understood. I really fail to see how anyone with half a brain can have so cocksure a view about the minimum wage without better knowledge about this question than any of us really has.
If history were art
Amusing link in popmatters.com to something that really should have happened:
From the Friar’s Club Roast of Donald Rumsfeld
Hoover Theater, Washington, D.C.
President George W. Bush: “… heckuva job, Rummy, heckuva job. I should’ve gone with my first choice for Secretary of Defense—a retarded Doberman! (RAUCOUS LAUGHTER FROM CROWD) Hahaha! Haha! Ha! When Don first came to me about Congressional oversight, I said—Donny! Bubalah! Forget about it! If I was worried about Congress, I’d have dissolved the whole branch after breakfast! (MORE RAUCOUS LAUGHTER) … I kid, though, I kid. Look, Rummy, I know how you feel. I once made a real big mess myself—woke up in south Houston with a Mexican hooker and a coke hangover like you wouldn’t believe. Luckily, I had Dad’s pals to bail me out. Hey, wait a second! We got ‘em this time, too! Hawhawhaw! Aha! Ah!"
From the Friar’s Club Roast of Donald Rumsfeld
Hoover Theater, Washington, D.C.
President George W. Bush: “… heckuva job, Rummy, heckuva job. I should’ve gone with my first choice for Secretary of Defense—a retarded Doberman! (RAUCOUS LAUGHTER FROM CROWD) Hahaha! Haha! Ha! When Don first came to me about Congressional oversight, I said—Donny! Bubalah! Forget about it! If I was worried about Congress, I’d have dissolved the whole branch after breakfast! (MORE RAUCOUS LAUGHTER) … I kid, though, I kid. Look, Rummy, I know how you feel. I once made a real big mess myself—woke up in south Houston with a Mexican hooker and a coke hangover like you wouldn’t believe. Luckily, I had Dad’s pals to bail me out. Hey, wait a second! We got ‘em this time, too! Hawhawhaw! Aha! Ah!"
Wednesday, January 03, 2007
Fun news for the day
There's nothing quite like grading exams to feed the urge to procastinate, hence more posts here lately.
With all the dispiriting news in the papers these days, it's nice to see this in the New York Times concerning a recent spacecraft probe of the Saturn moon, Titan:
"When the spacecraft conducted its first radar search above 70 degrees north latitude, Ellen R. Stofan, leader of the team, said in an interview, 'We saw a huge swath of the surface just covered with lakes, like Minnesota.'”
Kind of makes you want to go there, wandering hand in hand by the shorelines. True, these are methane lakes, and the temperature is a couple of hundred degrees below zero. But then again Minnesota is no picnic in January either.
With all the dispiriting news in the papers these days, it's nice to see this in the New York Times concerning a recent spacecraft probe of the Saturn moon, Titan:
"When the spacecraft conducted its first radar search above 70 degrees north latitude, Ellen R. Stofan, leader of the team, said in an interview, 'We saw a huge swath of the surface just covered with lakes, like Minnesota.'”
Kind of makes you want to go there, wandering hand in hand by the shorelines. True, these are methane lakes, and the temperature is a couple of hundred degrees below zero. But then again Minnesota is no picnic in January either.
Line item veto
Bush's silly op-ed in today's Wall Street Journal repeats the tired claim that, if only he had the line item veto, he could hold the line on spending. Bruce Bartlett handled this canard nicely in a NY Times blog some months ago (accessible to Times Select readers only, I believe), noting among other points that Bush has yet to veto any spending bill and that, at the state level, empirical data suggest that all the line item veto does is shift spending to match the governor's priorities more and the legislature's priorities less.
Ever since the election, Bush has of course discovered the earmarks issue, previously a matter of zero concern to him. But it's important, I think, to make the point that line item vetoes can easily increase spending, rather than reduce it. And under Bush that is exactly what I would expect. But perhaps not only under him.
Let's start with the naive static view, in which the legislature passes a bunch of stuff. Then the executive uses his line item veto, in which case spending declines, or else he doesn't use it, in which case spending is unaffected.
This would pretty much be it if all political actors' short-term memories were on a par with that of the protagonist in the movie Memento. (Leaving aside how that character ingeniously tries to act consistently in pursuit of long-term goals despite his short-term memory loss.)
But in fact everyone operates in the budgetary game with enough short-term and long-term memory to maneuver in the shadow of the rules, whatever they are. So the only clear effect of a line item veto is that it strengthens the executive relative to the legislature. If he wants higher spending than does the legislature, the line item veto helps him to get it, by offering him an extra tool to use in bargaining for votes. ("Support my new mega-program or I will line item veto your earmarks.")
The real issue, then, is what effect we should ascribe to its shifting budgetary authority, at the margin, from the legislature to the executive. Here there is a fundamental ambiguity. Legislatures tend to like more small bore piecemeal stuff than executives do, especially if the legislatures aren't tightly run by a leadership in parliamentary style (which can make them more executive-like). After all, there are 435 House districts just waiting to be outfitted with bridges to nowhere, Lawrence Welk museums, unneeded military bases, etc. But executives, while they have less incentive to do that sort of thing, tend to like doing more really big expensive stuff. They are looking for legacy-makers. This could mean a Star Wars missile defense, or national healthcare, or a costly foreign war, or whatever else tickles a particular executive's fancy. One way or another, the job creates powerful incentives to think big.
So here's my bottom line. A President is playing on a big stage and thus, I surmise, is likely on average to want more spending than the Congress does. (Governors aren't on quite as big a stage, so this aspect might show up less in the empirical data from that level.) Give Presidents the line item veto, and the predominant effect is likely to be that it helps them get more big stuff, even if they use it every now and then to reduce the small stuff.
Once again, therefore, Bush's proposed policy points in the direction of greater profligacy, certainly under him but probably in the long run as well. Good to know that he has zero chance of getting it, and is actually just preparing to play the blame game after he doesn't.
Ever since the election, Bush has of course discovered the earmarks issue, previously a matter of zero concern to him. But it's important, I think, to make the point that line item vetoes can easily increase spending, rather than reduce it. And under Bush that is exactly what I would expect. But perhaps not only under him.
Let's start with the naive static view, in which the legislature passes a bunch of stuff. Then the executive uses his line item veto, in which case spending declines, or else he doesn't use it, in which case spending is unaffected.
This would pretty much be it if all political actors' short-term memories were on a par with that of the protagonist in the movie Memento. (Leaving aside how that character ingeniously tries to act consistently in pursuit of long-term goals despite his short-term memory loss.)
But in fact everyone operates in the budgetary game with enough short-term and long-term memory to maneuver in the shadow of the rules, whatever they are. So the only clear effect of a line item veto is that it strengthens the executive relative to the legislature. If he wants higher spending than does the legislature, the line item veto helps him to get it, by offering him an extra tool to use in bargaining for votes. ("Support my new mega-program or I will line item veto your earmarks.")
The real issue, then, is what effect we should ascribe to its shifting budgetary authority, at the margin, from the legislature to the executive. Here there is a fundamental ambiguity. Legislatures tend to like more small bore piecemeal stuff than executives do, especially if the legislatures aren't tightly run by a leadership in parliamentary style (which can make them more executive-like). After all, there are 435 House districts just waiting to be outfitted with bridges to nowhere, Lawrence Welk museums, unneeded military bases, etc. But executives, while they have less incentive to do that sort of thing, tend to like doing more really big expensive stuff. They are looking for legacy-makers. This could mean a Star Wars missile defense, or national healthcare, or a costly foreign war, or whatever else tickles a particular executive's fancy. One way or another, the job creates powerful incentives to think big.
So here's my bottom line. A President is playing on a big stage and thus, I surmise, is likely on average to want more spending than the Congress does. (Governors aren't on quite as big a stage, so this aspect might show up less in the empirical data from that level.) Give Presidents the line item veto, and the predominant effect is likely to be that it helps them get more big stuff, even if they use it every now and then to reduce the small stuff.
Once again, therefore, Bush's proposed policy points in the direction of greater profligacy, certainly under him but probably in the long run as well. Good to know that he has zero chance of getting it, and is actually just preparing to play the blame game after he doesn't.
Tuesday, January 02, 2007
The "surge"
According to the BBC:
"[T[he speech setting out changes in Mr Bush's Iraq policy is likely to come in the middle of next week.
"Its central theme will be sacrifice.
"The speech, the BBC has been told, involves increasing troop numbers.
"The exact mission of the extra troops in Iraq is still under discussion, according to officials, but it is likely to focus on providing security rather than training Iraqi forces." [Note: This focus is necessary in order to avoid following the Iraq Study Group's recommendations.]
Silly me, I had always thought that you set objectives first, then decide what resources are needed to accomplish them.
"[T[he speech setting out changes in Mr Bush's Iraq policy is likely to come in the middle of next week.
"Its central theme will be sacrifice.
"The speech, the BBC has been told, involves increasing troop numbers.
"The exact mission of the extra troops in Iraq is still under discussion, according to officials, but it is likely to focus on providing security rather than training Iraqi forces." [Note: This focus is necessary in order to avoid following the Iraq Study Group's recommendations.]
Silly me, I had always thought that you set objectives first, then decide what resources are needed to accomplish them.
Thursday, December 21, 2006
Important article
Why isn't Cheney right about the importance of a totally unfettered Executive managing foreign policy and responding to security threats? Even people who are thoughtful and sane, such as Judge Posner in some of his popular writings on these subjects, take the point about the importance of Presidential discretion in terms of energy and effectiveness.
One counter-argument is that an individual's decision quality will likely be more variable, for bad as well good, than the actions of collective institutions such as the U.S. Congress. Obviously, this point seems especially forceful after 6 years with the worst President in U.S. history, a man who knows less, thinks less, reads less, and is less emotionally mature than my 10 and 13 year old children. But of course one shouldn't over-generalize from how bad he is to the Presidency as a long-term institution, except insofar as he so vividly illustrates the variance and downside risk.
The highly regarded Harvard economist Edward Glaeser has an interesting new National Bureau of Economic Research Working Paper, "The Political Economy of Warfare" (# 12738, available on line at www.nber.org but to subscribers only) that could hardly be more timely in illustrating one of the broader problems. His analysis is not new, as he makes very clear up front, but is vital and under-appreciated.
To quote from the introduction:
"Why do countries, both democracies and dictatorships, engage in massively self-destructive wars? ....
"This paper ... presents a model of warfare where leaders benefit from conflict even though the population as a whole loses. Warfare creates domestic political advantages, both for insecure incumbents like Napoleon III and flr long-shot challengers, like Islamic extremists in the Middle East, even though it is costly to the nation as a whole. Self-destructive wars can be seen as an agency cost problem where politicians hurt the nation but increase their probability of political success. This problem becomes more severe if the population can be falsely persuaded that another country is a threat."
The paper's analysis uses a political economy model plus the following historical examples: Napoleon III, Bismarck, the European participants in World War I, and the U.S. from 1896 through 1975.
This is not a paper that will be criticized on the ground that extending the period analyzed would change the empirical conclusions.
Designing institutions without regard to agency costs is not an intellectually defensible course.
One counter-argument is that an individual's decision quality will likely be more variable, for bad as well good, than the actions of collective institutions such as the U.S. Congress. Obviously, this point seems especially forceful after 6 years with the worst President in U.S. history, a man who knows less, thinks less, reads less, and is less emotionally mature than my 10 and 13 year old children. But of course one shouldn't over-generalize from how bad he is to the Presidency as a long-term institution, except insofar as he so vividly illustrates the variance and downside risk.
The highly regarded Harvard economist Edward Glaeser has an interesting new National Bureau of Economic Research Working Paper, "The Political Economy of Warfare" (# 12738, available on line at www.nber.org but to subscribers only) that could hardly be more timely in illustrating one of the broader problems. His analysis is not new, as he makes very clear up front, but is vital and under-appreciated.
To quote from the introduction:
"Why do countries, both democracies and dictatorships, engage in massively self-destructive wars? ....
"This paper ... presents a model of warfare where leaders benefit from conflict even though the population as a whole loses. Warfare creates domestic political advantages, both for insecure incumbents like Napoleon III and flr long-shot challengers, like Islamic extremists in the Middle East, even though it is costly to the nation as a whole. Self-destructive wars can be seen as an agency cost problem where politicians hurt the nation but increase their probability of political success. This problem becomes more severe if the population can be falsely persuaded that another country is a threat."
The paper's analysis uses a political economy model plus the following historical examples: Napoleon III, Bismarck, the European participants in World War I, and the U.S. from 1896 through 1975.
This is not a paper that will be criticized on the ground that extending the period analyzed would change the empirical conclusions.
Designing institutions without regard to agency costs is not an intellectually defensible course.
Friday, December 15, 2006
Party politics
Interesting article by political scientist Morris Fiorina in the recently published essay collection by Alan Gerber and Eric Patashnik, Promoting the General Welfare.
In "Parties as Problem Solvers," Fiorina notes the argument that he had been making for many years (and that I personally have considered persuasive) to the effect that national politics would function better if the parties were stronger. Several strands to this argument. One is that interest groups are weakened if the parties in effect cartelize and thus reduce any one group's market power. A strand emphasized by Fiorina held that "unified political parties led by strong presidents were more likely to act decisively to meet the challenges facing the country, and when they took their collective performance records to the electorate for ratification or rejection, the voters at least had a good idea whom to reward or blame."
He notes that the 1980s were the high water mark of responsible behavior by relatively united political parties.
He then notes what has happened since:
“In 2002 a Republican administration ostensibly committed to free enterprise endorsed tariffs to protect the U.S. steel industry, a policy condemned by economists across the ideological spectrum. Also in 2002 Congress passed and President Bush signed an agricultural subsidy bill that the left-leaning New York Times decried as an ‘orgy of pandering to special interest groups,’ the centrist U.S.A. Today called ‘a congressional atrocity,’ and the right-leaning Economist characterized as ‘monstrous.’ In 2003 Congress passed and the president signed a special interest-riddled prescription drug plan that was the largest entitlement program adopted since Medicare itself in 1965, a fiscal commitment that immediately put the larger Medicare program on a steep slide toward bankruptcy. In 2004 congressional Republicans proposed and President Bush supported a constitutional amendment to ban gay marriage, a divisive proposal that had no chance of passing. After his reelection, President Bush declared his highest priority was to avert a crisis in a Social Security system he insisted was bankrupt, by establishing a system of personal accounts [that had zero relationship to solvency – my addition], while disinterested observers generally pronounced the situation far from crisis and in need of relatively moderate reform – especially compared to Medicare. In 2005 the Republican Congress passed and President Bush signed a pork-filled transportation bill that contained 6,371 congressional earmarks, forty times as many as contained in a bill signed by an earlier Republican president in 1987. Meanwhile, at the time of this writing Americans continue to die in a war of choice launched on the basis of ambiguous intelligence that appears to have been systematically interpreted to support a previously adopted position.
“The preceding are only some of the more noteworthy lowlights of public policies adopted or proposed under the responsible party government of 2000-05. All things considered, if someone wished to argue that politics in the 1970s [with its lack of party discipline] was better than today, I would find it hard to rebut them. Why?”
Fiorina argues that the reasons for the failure of strong-party government to deliver the anticipated benefits include:
1) The change made politics more conflictual, with winning vs. losing being much more clearcut and all-important, leading to permanent campaigning and the disappearance of any intermittent efforts at actual governance. Party positioning for the next election becomes all-consuming all the time.
2) Voters were offered clearer and more polarized choices than they actually wanted, leading to much less responsiveness to public sentiment in a heterogeneous society.
3) The parties now seek 50% plus one vote, not maximizing their votes, since once you have a majority you can pass almost anything you like (well, Social Security privatization aside) without having to claim a popular mandate.
I offer some explanations of my own for the failure of party government to improve the political process, including a variant of #3, in my new book.
This whole subject requires a lot more thought from political scientists and from everyone who is interested in the proper (or at least adequate) functioning of our government institutions. For now, the only clear takeaway is: Be careful what you wish for, or you just might get it.
In "Parties as Problem Solvers," Fiorina notes the argument that he had been making for many years (and that I personally have considered persuasive) to the effect that national politics would function better if the parties were stronger. Several strands to this argument. One is that interest groups are weakened if the parties in effect cartelize and thus reduce any one group's market power. A strand emphasized by Fiorina held that "unified political parties led by strong presidents were more likely to act decisively to meet the challenges facing the country, and when they took their collective performance records to the electorate for ratification or rejection, the voters at least had a good idea whom to reward or blame."
He notes that the 1980s were the high water mark of responsible behavior by relatively united political parties.
He then notes what has happened since:
“In 2002 a Republican administration ostensibly committed to free enterprise endorsed tariffs to protect the U.S. steel industry, a policy condemned by economists across the ideological spectrum. Also in 2002 Congress passed and President Bush signed an agricultural subsidy bill that the left-leaning New York Times decried as an ‘orgy of pandering to special interest groups,’ the centrist U.S.A. Today called ‘a congressional atrocity,’ and the right-leaning Economist characterized as ‘monstrous.’ In 2003 Congress passed and the president signed a special interest-riddled prescription drug plan that was the largest entitlement program adopted since Medicare itself in 1965, a fiscal commitment that immediately put the larger Medicare program on a steep slide toward bankruptcy. In 2004 congressional Republicans proposed and President Bush supported a constitutional amendment to ban gay marriage, a divisive proposal that had no chance of passing. After his reelection, President Bush declared his highest priority was to avert a crisis in a Social Security system he insisted was bankrupt, by establishing a system of personal accounts [that had zero relationship to solvency – my addition], while disinterested observers generally pronounced the situation far from crisis and in need of relatively moderate reform – especially compared to Medicare. In 2005 the Republican Congress passed and President Bush signed a pork-filled transportation bill that contained 6,371 congressional earmarks, forty times as many as contained in a bill signed by an earlier Republican president in 1987. Meanwhile, at the time of this writing Americans continue to die in a war of choice launched on the basis of ambiguous intelligence that appears to have been systematically interpreted to support a previously adopted position.
“The preceding are only some of the more noteworthy lowlights of public policies adopted or proposed under the responsible party government of 2000-05. All things considered, if someone wished to argue that politics in the 1970s [with its lack of party discipline] was better than today, I would find it hard to rebut them. Why?”
Fiorina argues that the reasons for the failure of strong-party government to deliver the anticipated benefits include:
1) The change made politics more conflictual, with winning vs. losing being much more clearcut and all-important, leading to permanent campaigning and the disappearance of any intermittent efforts at actual governance. Party positioning for the next election becomes all-consuming all the time.
2) Voters were offered clearer and more polarized choices than they actually wanted, leading to much less responsiveness to public sentiment in a heterogeneous society.
3) The parties now seek 50% plus one vote, not maximizing their votes, since once you have a majority you can pass almost anything you like (well, Social Security privatization aside) without having to claim a popular mandate.
I offer some explanations of my own for the failure of party government to improve the political process, including a variant of #3, in my new book.
This whole subject requires a lot more thought from political scientists and from everyone who is interested in the proper (or at least adequate) functioning of our government institutions. For now, the only clear takeaway is: Be careful what you wish for, or you just might get it.
Thursday, December 14, 2006
Classic rock?
The new expanded reissue of Pavement's Wowee Zowee is enormous fun and well worth repeated listens. I had previously under-rated this album relative to Pavement's previous two and next one (Slanted & Enchanted, Crooked Rain, Brighten the Corners). Favorite new track: the minute-long, bizarre "Candy Lad," a tag-on to a live track on Disk 2. "Dad, you're into some messed-up music," my older son told me as it played.
Wednesday, December 13, 2006
Good appointment
Peter Orszag has just been named to head the Congressional Budget Office. Good news insofar as he is able to exert any influence, whether on policy or simply on measurement of policy.
Monday, December 11, 2006
Now available
After some delay, my new book, "Taxes, Spending, and the U.S. Government's March Towards Bankruptcy," is indeed available on-line.
Here are the links to it at Amazon and, with a better price, at Barnes & Noble.
I've just come back from a Tax and Corporate Governance conference in Munich, where I presented a paper on the U.S. disclosure and penalty regime for corporate tax shelters, which I will post shortly on SSRN.
A U.K. commentator of mine, hostile to my pro-government stance in the paper, apparently planned to compare me to the Bush Administration as an exporter of evil U.S. ideas that Europe ought to ignore. Luckily, he subsided on this comparison (at least orally) although his written comments may retain the reference.
It's a funny feeling to be an American abroad these days, if people consider you a representative of U.S. policy. One feels decidedly uneasy in a manner that has no precedent in my own lifetime experience as an American.
I told this commentator that his complaining (in connection with me) about the Bush Administration made me feel like Basily Fawlty, in the episode of Fawlty Towers where someone complains to him about Manuel's standard of service in the dining room, and Basil responds: "Do you think I don't know? You only dine here - I have to live with it!"
I do, however, feel a bit more entitled than Basil to dodge the complaint this way, as his power over Manuel somewhat exceeds my degree of influence over U.S. foreign and security policy.
Here are the links to it at Amazon and, with a better price, at Barnes & Noble.
I've just come back from a Tax and Corporate Governance conference in Munich, where I presented a paper on the U.S. disclosure and penalty regime for corporate tax shelters, which I will post shortly on SSRN.
A U.K. commentator of mine, hostile to my pro-government stance in the paper, apparently planned to compare me to the Bush Administration as an exporter of evil U.S. ideas that Europe ought to ignore. Luckily, he subsided on this comparison (at least orally) although his written comments may retain the reference.
It's a funny feeling to be an American abroad these days, if people consider you a representative of U.S. policy. One feels decidedly uneasy in a manner that has no precedent in my own lifetime experience as an American.
I told this commentator that his complaining (in connection with me) about the Bush Administration made me feel like Basily Fawlty, in the episode of Fawlty Towers where someone complains to him about Manuel's standard of service in the dining room, and Basil responds: "Do you think I don't know? You only dine here - I have to live with it!"
I do, however, feel a bit more entitled than Basil to dodge the complaint this way, as his power over Manuel somewhat exceeds my degree of influence over U.S. foreign and security policy.
Tuesday, December 05, 2006
Oedipus had nothing on this guy
Bush, discussing his father in a recent interview:
"I love to talk to my dad about things between a father and a son, not policy ...
[Does he consult with his father?] "No ... He understands what I know, that the level of information I have relative to the level of information most other people have, including himself, is significant ...
"I am the commander-in-chief."
"I love to talk to my dad about things between a father and a son, not policy ...
[Does he consult with his father?] "No ... He understands what I know, that the level of information I have relative to the level of information most other people have, including himself, is significant ...
"I am the commander-in-chief."
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