Ron Paul is right a lot Tuesday, Apr 13 2010 

Some readers might not believe it, but there was a period of time when I considered myself a “Ron Paul libertarian.” Paul is who inspired me to explore libertarianism and, indeed, politics in general. His run for presidency last election got me to not only explore political concepts differently but to also be actively engaged in the issues of the day, so he has always been an influential person in my political understandings. However, not long ago, I became disillusioned with Paul and suffice it to say I disagree with Paul on several key issues. There’s no need to go into the details of that transformation, but I should point out that I still agree with Paul on many things.

One thing that I particularly like about Paul is that he’s quick to criticize both of the political parties in the United States (even when he belongs to one of them). I don’t usually like to get involved in party politics, as they are usually inane, but I think Paul raises some great points that are hard to ignore. One salient point that he highlighted at last week’s Southern Republican Leadership Conference, much to the chagrin of many of the conservative Republicans in attendance, was the hypocrisy of mainstream Republicanism. He blasted them for their neoconservative tendencies. In his speech that drew both applause and ire, Paul pointed out, “The conservatives and the liberals, they both like to spend.” He condemned how “Conservatives spend money on different things.” To wit, “They like embassies, and they like occupation. They like the empire. They like to be in 135 countries and 700 bases.”

Certainly the right-wing loves to pay lip service to fiscal conservatism, balancing budgets, and keeping spending to a minimum. In practice, however, they act just the opposite, as the record clearly demonstrates. Paul, despite being a member of the Republican party, has no qualms mentioning this. Paul is right in lambasting them for their costly endeavors, which include the expansionist foreign policy, two wars in the Middle East, Wall Street bailouts, tax cuts without spending cuts, and radical spending on military. This is all okay by Republican standards, and they see no inconsistency in their rhetoric for small government and limited spending.

Republicans actually tend to outspend their Democrat counterparts. It was, after all, Bill Clinton who created a budget surplus and George W. Bush who accumulated more national debt than every other president combined (to use the words of Stephen Frank of the political science department and supported by King Banaian of the economics department). While Democrats do spend, they typically “spend money on different things,” like social programs, science, aide, education, and infrastructure. They also don’t tend go on and on about deficits, limiting spending, and so on.

The pattern is familiar. Ronald Reagan, for example, championed free markets, but very rarely ever adhered to the doctrine. Noam Chomsky refers to this as the “really existing free market doctrine,” namely because it rarely is ever consistent with “the official doctrine that is taught to and by the educated classes, and imposed on the defenceless.” George H. W. Bush railed against taxes—before he raised them. George W. Bush touted “no nation building,” before he began his senseless adventurism in the Middle East. Perhaps we shouldn’t expect anything else from politicians.

Indeed, to bring it to the present, Michele Bachmann, the congresswoman from Minnesota, claimed yesterday, “we’ve gone from the United States having 100% of the private economy private, to today the federal government effectively owns or controls 51% of the private economy” over the past 15 months of President Obama’s presidency (this is why she believes Obama is “anti-American” and “the most radical president” in U.S. history). Of course, it’s not very difficult to see how patently absurd her claims are. One of her examples is the bank bailouts. However, as FOX News’ Chris Wallace was quick to point out, it was President Bush who started those bailouts, which Bachmann responded was “unfortunate.” Certainly unfortunate for her argument. Even more unfortunate is that Obama’s actions don’t actually constitute “nationalization.”

As Ben Chabot of the Yale economics department keenly pointed out to NPR in 2008, “it’s not nationalization because they didn’t buy common stock with voting rights, so they don’t have a seat at the table.” The business press is in accord, and believe “the Obama plan is working.” But even if it was nationalization, there’s nothing “anti-American” about nationalization, as Harvard’s Richard Parker is quick to point out. He mentions our long history of government intervention and nationalization, beginning with “the Northwest Ordinance of 1789, and then the Louisiana Purchase of 1803.” He continues with mentioning the vast amount of land, airspace, roads, and valuable infrastructure that the U.S. government owns. During the two world wars, the U.S. government took over sizable portions of the economy—one reason for the U.S.’s recuperation from the Great Depression. After 9/11, Bush “effectively nationalized the private-security firms at airports, and replaced them with the federal TSA.” Needless to say, no one moaned about “anti-Americanism.” As I have always liked to mention, the United States has always been heavily involved in markets (having a Republican president or Congress makes no difference); fantasies about the “American free market system” are just that.

In my opinion, all this says something about the intellectual and moral culture of today’s Republicanism and our society in general. The underpinning assumption on which all this works is that what’s wrong for you is right for me. It’s a poor reflection that we cannot rise to even a minimal moral standard.

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Is Social Security in shambles? Saturday, Apr 10 2010 

The answer to this question requires some careful examination that goes beyond the platitudes that we are supposed to take as self-evident. What we’re constantly told is that Social Security is in shambles. It’s bankrupt. The elderly on Social Security are outpacing workers who contribute to it, and we’re headed for a crisis very soon. Even King Banaian, the chairman and a professor of the economics department at SCSU, says we suffer from “cognitive dissonance”; it’s “part of the angst that grips” us, though none of us “want to hear of big changes.” Ed Morrissey from the Hot Air blog says it was foolhardy to listen to those who “assured us that Social Security was safe for decades without reform.”

The reason for this maelstrom is because, as The New York Times reports, “the system will pay out more in benefits than it receives in payroll taxes” this year. The recession has claimed millions of jobs and, as a result, tax receipts are down. At the same time, the Baby Boomer generation is beginning to retire en masse and will be collecting their Social Security benefits. By 2016, “indefinite deficits” are expected. Naturally, we should be frightened.

Indeed, Social Security looks like it is in shambles. Save some major reforms, which may very well including privatizing the system, the entire program appears to be heading for collapse. In fact, we’re probably better off getting rid of it entirely.

That much seems like common sense. If you collect less than you handout, you’re eventually going to go broke and the system cannot continue as is. This common sense is what drives the usual iterations about how Social Security is doomed. But, as with everything claimed to be common sense and self-evident, we should force ourselves to ask if it’s true. The assumption, of course, is that you don’t question it. It’s easy to parrot what the demagogues and pundits are saying on television and blogs; it requires some effort to look a bit beyond the rhetoric and platitudes.

Is it true that a fiscal disaster is on its way? As it happens, it’s not. In fact, if we bother to compare our Social Security system to the pension systems of other highly developed nations, just as the OECD has done, we find that the United States has one of the least generous pension systems for the elderly. Yet the fiscal hawks keep pushing on us “the great deficit scare,” though prominent economist such as Robert Eisner have been telling us for a long time now how absurd their claims are. Eisner’s book is over a decade old now, but we can learn some valuable lessons from it. Moreover, Dean Baker of the Center for Economic and Policy Research warns that the policies deficit hawks want to push through, which are are not based on sound economics, would be much more devastating than any projected deficit.

It’s certainly true the American population is aging, and faster than the workforce is growing (or will be soon). In economics, the technical literature refers to this as the dependency ratio. It tells us the number of dependent people (children under the age of 15 and adults over the age of 65) for every 100 productive people (people aged 16 to 64). The United States does not have the largest dependency ratio—far from it, in fact. And when we actually bother to look, the dependency ratio is not currently at the highest it’s ever been (nor will it be for a long time). That was around 1965. There was a problem in the 1960s, a more significant problem than we face today, back when real GDP was almost a quarter of what it is today (i.e. when we were much poorer).

What did they do about it? Did they say the rights to a decent life in a highly developed nation simply “are not natural rights of the people,” and therefore we should just stop helping the young and the elderly find a more decent life? Actually, that’s not what they did. They increased expenditures. That’s how they dealt with the unprecedented dependency ratio, one we won’t come close to experiencing for a long time. The solution to the current “crisis” is the same. You increase expenditures to ensure disadvantaged people can still live a life that isn’t marred by poverty, sickness, and starvation—so that people’s basic needs are met. There’s a consensus in every rich and developed nation that safety nets are a society’s moral obligation. In fact, the world came together and agreed on the Universal Declaration of Human Rights, which affirms these rights, calling them “indispensable for [a person’s] dignity and the free development of his personality.”

When we actually look at the published literature, there is an almost unanimous agreement that there is no “crisis,” that the dangers of an aging society are being way overblown (it is argued, in fact, that an aging society is beneficial), and that the problems that do lie ahead are quite manageable (in the same way the bigger problems of the 1960s were managed). What’s pointed out is that any fiscal problem that might possibly arise is easily addressed. For example, the Social Security board of trustees report that future problems (because there isn’t one currently) could be remedied with a simple increase on the payroll tax. The estimated 75-year actuarial deficit for OASDI is just 2% of taxable payroll (so you increase it from something like 14% to 16%). The OECD also came out with a major report on easy solutions for any possible future problem that might occur with the pension system, none of which included abandoning the pension system. One reason is because it’s recognized that there is a moral obligation on our part and that there is in fact something that separates us from primitive animals that might simply “let nature take its course” (one of the more repugnant euphemisms I’ve heard).

So the solution, then, is quite simple. We don’t need to get rid of Social Security. Nor is there a need for “big changes” or major reform.

Democracy vs. libertarianism Monday, Jan 11 2010 

One of the problems that ideologues of any persuasion probably run into is the problem of democracy. What do I mean by “the problem of democracy”? What I mean by this is that the democratic majority often does not adhere or conform perfectly to the ideology that a person or group may have. This can be a problem for the ideologue if he or she professes to be a democrat (a supporter of democracy). So, for example, the libertarian may decry the government’s role in society, despite the democratic majority wanting social programs or government regulation. Thus, any claim that we should wipe out social spending is inherently anti-democratic in this sense. My previous post on government involvement touches on this issue. Of course, the ideologue can bypass this “problem” if they do not profess to be democrats. Instead, we should simply implement the policies of our ideology, no matter how much the public is opposed to it. That is, we become authoritarians. For the libertarian or the anarchist, this is inherently paradoxical. We cannot claim to be libertarians and authoritarians at the same time—the ideas are necessarily opposed to each other. It is not possible to authoritatively implement our policies in the name of libertarianism, for example. That isn’t to say no one has tried; for example, Augusto Pinochet, in his brutal dictatorship over Chile, enacted free-market reforms in the name of “liberating.” We know that’s hypocritical, and we understand the perversity in his understanding of “liberty.” Here, “liberty” means liberty for the corporation, not for the people. Thus, the ideas of libertarianism and anti-democratic measures are incompatible.

How can the ideologue cope with “the problem of democracy”? How can we accept certain principles that the majority rejects, yet still call ourselves “champions of democracy”? I have two suggestions, and others are welcome. First, be what could be called a philosophical ideologue (cf. philosophical anarchism). That is to say, you keep your beliefs in whatever ideology you choose, but you accept the majority’s opinion as the opinion that should be adhered to. So, for example, if you’re against social spending, but the majority supports it, you continue to believe that social spending is wrong but accept the majority’s choice as the will of the people. For some, this might seem like an unpleasing solution, which I accept. It does seem contradictory to accept the choice but at the same time to not accept the choice. It would seem as if we are not truly adhering to our ideologies (that’s a common argument against anarchists who do not support the overthrow of the state—they’re not real anarchists). Do we or do we not accept that argument? The other thing I suggest is that we teach or advocate our ideology in a way that is not anti-democratic. We explain our philosophies (non-coercively) to others in the hopes that they will accept them. In this way, we can influence the outcome of the democratic choice without resorting to authoritarianism.

I accept that others may not accept this. They may say we have to cling to our ideologies, no matter what. We must reject the democratic majority. They may not say it in this way, but it is what they’re saying. I reject this argument and find it to be dangerous. Over ideology, I am a democrat.

P.S. This is a further exploration of a concept that Dr. Spagnoli explores on his blog in a post titled “What is Democracy?” In it, he explains, “Napoleon Bonaparte propelled his armies across Europe on behalf of the universal principles of liberty, equality and fraternity . . . Napoleon’s armies occupied Europe because they wanted to export French principles and French civilization. . . . France was the advance guard of the struggle of humanity for freedom and against old-style authoritarianism.” The parallels to contemporary foreign affairs are obvious enough. Claims Dr. Spagnoli, “Attacking, conquering and occupying other countries, even with the purpose of liberating these countries from oppression and archaic authoritarian forms of government, seems to be highly illogical and self-contradictory. It’s incompatible with the very principles of democracy (democracy is self-determination).” The question being raised is, “are we allowed to impose or enforce democracy in an authoritarian way?” Likewise, I raise the question if libertarians are allowed to impose or enforce libertarianism in an authoritarian way. I say no.

Is the government inefficient? Sunday, Jan 3 2010 

I found this passage somewhere on the Internet, unknown author:

This morning I was awoken by my alarm clock powered by electricity generated by the public power monopoly regulated by the U.S. Department of Energy. I then took a shower in the clean water provided by the municipal water utility. After that, I turned on the TV to one of the FCC-regulated channels to see what the National Weather Service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like using satellites designed, built, and launched by the National Aeronautics and Space Administration. I watched this while eating my breakfast of the U.S. Department of Agriculture-inspected food and taking the drugs which have been determined safe by the Food and Drug Administration.

At the appropriate time as regulated by the U.S. Congress and kept accurate by the National Institute of Standards and Technology and the U.S. Naval Observatory, I get into my National Highway Traffic Safety Administration-approved automobile and set out to work on the roads built and maintained by the local, state, and federal departments of transportation, possibly stopping to purchase additional fuel of quality level determined by the Environmental Protection Agency, using legal tender issued by the Federal Reserve System. On the way out the door, I deposit any mail I have to be sent out via the U.S. Postal Service and drop the kids off at the public school.

After work, I drive my NHTSA car back home on the DOT roads, to a house that has not burned down in my absence because of the state and local building codes and fire marshal’s inspection, and which has not been plundered of all its valuable thanks to the local police department.

I then log on to the Internet, which was developed by the Defense Advanced Research Projects Administration and post on freerepublic.com and FOX News forums about how SOCIALISM in medicine is BAD because government can’t do anything right.

What this passage is getting at is the myriad functions that government serves— sometimes unbeknown to the general public—and it only begins to scratch the surface. It would, I think, be pretty safe to say government is responsible for or at least crucially linked to the development of modern society, not free markets. That’s just a descriptive statement, and I believe the main point of the quoted passage. There are some, like those “on freerepublic.com and FOX News forums,” who bemoan government and its supposed inefficiency, yet take for granted all the things it provides them (like roads and police protection).

The question, really, is an economic one. One issue that arises concerns what are called public goods. In technical terms, a public good is any “good that is non-rivalrous and non-excludable.” All non-rivalrous means is that when one person uses that good another person is not restricted from also using that good (e.g., when I log on to the Internet, this does not preclude you from doing the same). All non-excludable means is that no one wanting access to the good can be reasonably denied access to that good. A decent example might lighthouse beams that provide light to ships, regardless of which ship it might be (that is, it’s difficult to exclude other people from seeing this light). As the Wikipedia article points out, “there may be no such thing as an absolutely non-rivaled and non-excludable good; but economists think that some goods approximate the concept closely enough for the analysis to be economically useful.” (The economic idea of public goods, by the way, was developed by Paul Samuelson, the pioneering Nobel laureate who died just three weeks ago.)

The problem that arises is that public goods are not produced efficiently in “free markets.” They’re under-produced. This causes what is called market failure; the market does not operate efficiently. The reason for this is because you can’t make a profit off of it, or not very much the closer the good approaches the concept of a public good. If a good produces a benefit to society that the creator of the good cannot profit from, there’s little economic incentive to produce such a good. That’s standard neoclassical economic theory, anyway. The idea is tied to what are called externalities. A positive externality is something people benefit from, e.g. clean air, but those who benefit from it don’t necessarily have to pay for it. An example I get from Milton Friedman, the great free-market thinker, is that when I plant a pretty garden in my front yard, other people get to experience the benefit of it without having to pay or do any work for it. Again, these are under-produced in free markets, according to standard theory, because there is not enough economic incentive to produce these things.

Well, one solution has been to have the government produce goods for public use, which is where the entire passage quoted above comes from. The result is that we all get to benefit from government involvement in the market place. I get the ability to tell the precise time because the government has taken the initiative to keep accurate account of time—something theory tells us profit-maximizing corporations would be unwilling to do.

At the same time, however, as the story above illustrated, people still bemoan government and its attempts to provide for the public good. The market is great, it will provide us all the things we need, and it will do so efficiently, they might say. The socialist might respond by pointing out that this is not necessarily true, and point to things like externalities and asymmetric information, which exist nearly everywhere, and conclude the market rarely works efficiently. For this reason, we need the government to provide for the public good, particularly when the unfettered market cannot. The right-winger (if they’re not Austrian) might concede that things like externalities and asymmetric information exist but posit that the government still ought not get involved because that would constitute an abridgment of our freedom, is coercive, evil, etc. The question becomes harder. Indeed, for many the question is not only economic but also ethical. At this point, I think most people begin to ask what the right balance is between market forces and government involvement. The question is left unanswered and, in mind, the answer remains to be seen.

Taxing luxury goods Monday, Nov 23 2009 

A little less polemical I hope, I’ve been thinking about sales taxes on luxury goods. Daniel Hamermesh has a post about this topic at the Freakonomics blog. His discussion is of college textbooks and a proposal to cut the sales tax on them (currently at 9%). Why cut taxes on a good that the wealthy disproportionately buy (“because college education is disproportionately undertaken by the offspring of higher-income families”)? This would be tantamount to “more tax breaks for the rich,” Hamermesh argues. (You might want to check out my post on whether college education is actually inferior.)

It is, of course, not true that only the wealthy pay for textbooks (or other luxury goods, for that matter). Reducing the cost of a good, including luxury goods, means people at lower incomes that were previously priced out of the market are now able to afford that good. Removing the sales tax on Rolls-Royces probably does nothing to help the poor. Textbooks, however, are goods that the poor are sometimes likely to buy, thanks to financial aid and other subsidies that help them afford university (you won’t find the poor getting aid to buy high-end luxury automobiles). Increasing the availability of higher education, I think, is a definite improvement for the poor. I think the argument that lowering the sales tax on textbooks is a bad idea is rather dubious.

Also, here is a good article by Aaron Edlin and Ian Ayres published on the Freakonomics blog regarding the recent tuition hikes in California (an astounding 32% by next fall), which students there have been protesting. Edlin and Ayres argue the tuition hike isn’t so bad—so long as there is a similar increase in financial aid going to the poor to help them afford it. It makes things fairer, they say. The rich, who were disproportionately benefited by the low tuition, now “pay a tuition much more commensurate with what he or she can afford.” The poor, on the other hand, are shielded from the tuition hike by the (supposed) increase in financial aid they’re receiving (the rich, of course, are not usually eligible for financial aid). (Whether California will be increasing financial aid is an entirely different story.)

This makes one wonder: are students who are protesting the tuition hikes in California only the rich students who are disproportionately benefited by low tuition? I suspect not. One reason might be the lack of increase in financial aid, another might be the increase in debt associated with higher use of financial aid (loans), and yet another might be the perception of really high tuition rates (e.g. at Yale and other private universities) that dissuade the poor to begin with (there seems to be information asymmetry). I suspect it’s probably not true that raising state tuition in this way is a “good thing.”

Obama evinces the truth: the crisis of democracy Tuesday, Oct 6 2009 

Today, President Obama announced that what I and others have been saying about democracy is true. Namely, it doesn’t function in the United States. As I point out in my post about democracy in the United States, it functions just as Dana Perino explains it: You get your say every four years, and you’re supposed to shutup in between those years. That is, you’re supposed to be relegated to be spectators in this “democracy,” not participants.

So when Obama declares he won’t listen to the public or Congress in how to handle the Afghanistan War, a war that is fundamentally wrong, he is implicitly agreeing with Perino and others who argue that the public should have no input on how the country is run.

These ideas are not new by any means either. This is essentially how it was designed by the Framers. This is what Madison meant when he said government’s role was “to protect the minority of the opulent against the majority.” The public was not to interfere with what he called the “Wealth of the nation.” Therefore, government is to be comprised of the “more capable set of men,” which “ought to come from, & represent, the Wealth of the nation.” That’s Obama’s role. Obama (and Congress) is there to represent elite opinion and interests (against the interests of the majority, i.e. the public). That’s how it was designed by the Framers.

One of the biggest supporters of this idea has been Walter Lippmann, the Pulitzer Prize-winning journalist who was renowned by the progressives of his era. The public, what he called the “ignorant and meddlesome outsiders,” should occasionally “lend their weight” to a small choice of the “responsible men” (what we call elections), but should, for the most part, be spectators rather than active participants in democracy. That’s because he considered public involvement in governing a “false ideal.” This idea was supported quite widely, even among the liberals. Take Harold Lasswell, for example — “a leading American political scientist and communications theorist.” He argued that we should ignore “democratic dogmatisms about men being the best judges of their own interests” because “men are often poor judges of their own interests” and because the “masses are still captive to ignorance and superstition.” These views are consistent with Lippmann’s, who argued for an elite class of men to rule (a vanguard of sorts) because, as Lasswell points out, men are not good judges of their own interests but “we are” (the “we” being elitists). So “we” have to stave off “the trampling and the roar of a bewildered herd” (that is, the public).

So, yes, Obama takes the elitist view when he declares that the public does not know what’s best for them. That’s what the “more capable set of men” are there to do. (And it should be no surprise that these “responsible men” “represent the Wealth of the nation” and not the public.) The public has no illusions either. They know it. Some 80% of Americans recognize that government is “run by a few big interests looking out for themselves,” and not “for the benefit of all the people.” That’s why 94% say government should “pay attention to the views of the people” more than every four years. But that’s now how the system is set up. Obama knows this.

But I think it also highlights another important subject, which is taxes. Michael Moore brings up a good point about them in a question and answer at a university regarding his new film on capitalism. People in America are upset about taxes. We’ve all seen the protests as of late. But if we look at places like France, which is no stranger to protests, we don’t see the public enraged over taxes, which are substantially higher there than here. Why the difference? Perhaps it’s because the lack of involvement by the public in deciding how their taxes are used here in America. Half of every tax dollar collected goes to the military, when a large majority of the population supports decreasing the radical spending on the military, for example. Our tax dollars aren’t really going where we want them to go (e.g. a majority of people support a public health care option). It’s not happening. There is (and has been) a huge gap between public opinion and elite opinion. Public opinion is ignored, as Obama proves to us. So I’m not surprised at all that tax day is so dreaded in America. In a functioning democracy, everybody would say “great, today is the day I get to contribute to the common decision that I was able to participate in.” It just doesn’t happen.

Funny tidbit Monday, Sep 28 2009 

Here’s a short little tidbit that satires the debate on health care reform (which I’ve written a little on, e.g. here). In it includes Will Farrell and others arguing, sarcastically obviously, for not forgetting about health insurance executives who have been getting such a bad rap:

Behavioral economics, taxes, and health care Sunday, Sep 20 2009 

In my previous post (Keynes vs. the Chicago school of economics), I posted a link to an article written by Paul Krugman regarding the current state of macroeconomics and its salient failures. One thing I pointed out is Krugman’s advocacy for a higher reliance on behavioral economics, which is a branch of economics that “applies scientific research on human and social, cognitive and emotional factors” to economic decisions. Essentially, it’s a combination of economics and psychology.

One thing behavioral economics helps us do is find differences in assumed, theoretical economic behavior and actual economic behavior. For example, in a recent paper by Congdon, Kling, and Mullainathan, the authors write, “Behavioral economists have now accumulated several decades of findings indicating that the standard economic assumptions about individual behavior are not accurate, that people do not act rationally, that they are not perfectly self-interested, and that they hold inconsistent preferences. Moreover, and especially in recent years, policy economists have increasingly come to see that these deviations from the standard assumptions about behavior matter for economic policy.” The authors point out that while such faulty assumptions about human behavior are used in modern economic theory, some justify it on the basis that they are simple and useful for modeling purposes and crafting new theories. However, write the authors, “behavioral economics argues that the standard assumptions are so consistently violated as to be neither literally true nor useful as modeling assumptions.” (Emphasis mine.) What this tentatively suggests is that some of our assumptions about economic decisions are so fundamentally disconnected from reality that they serve no relevant purpose in economic models that use such assumptions. This might also suggest that Krugman is correct that macroeconomics has a long way to go yet (and that perhaps behavioral economics should play an important role in crafting future theories).

This paper specifically deals with behavioral economics as it relates to taxes. On this, the authors declare, “Behavioral economics stresses that individuals are not, in practice, perfectly self-interested.” In fact, “They care about the welfare of others and they care about the fairness of the process that generates outcomes.” And this, I think, relates to some comments I made in a SCSU Scholars post regarding health care reform. The point I try to make is that I think there are some goods and services that we can call essential, that we can reasonably say no person should have to go without (at least in a highly developed, industrialized, and wealthy country such as the United States). For example, I think most people would agree policing, firefighting, and defense under law are all reasonably essential and that people should be entitled to such things even if they cannot afford them. My argument is that health care is something we can reasonably say people deserve to have even if they can’t afford it.

Now, I concede that this might just require taxes in the same way taxes are used to fund police protection, firefighting, and public defenders. Some people may say taxes are a “road that leads to slavery.” I don’t like taxes either, but I won’t go that far; the question isn’t whether there are taxes, per se. What we should ask ourselves instead is, To what end does this taxation go and does it represent what most Americans want? As the authors of the paper point out, people do actually care about the welfare of others and how welfare is achieved. So I think in answering the two questions I asked, and as someone who believes strongly in democratic principles, I think a tax in this case can be justified. For example, poll after poll show the American public favor a public health care system (and by wide margins). And it’s been like that for decades. Of course, if this were a functioning democracy, I think that would be the case by now.

Obama on health care in Minneapolis Sunday, Sep 13 2009 

On Saturday, President Obama came to Minneapolis to give a rally speech on his proposed health care reform. I was going home to St. Paul for the weekend so I thought I would try to go. I was lucky enough to get in and see the president (the first time I’ve seen one in person).

It was being held at the Target Center at 12:30 P.M. and doors opened at about 9:30 A.M., but lining up was allowed as early as 6:30. I’m not sure what time people started lining up to see the President speak because I didn’t get there until about 9:25 A.M., but by then the streets were already packed with lines spanning several blocks. There were, of course, a few protesters, some with interesting signs; there were no large quarrels between the Obama supporters and the detractors, though, and I actually saw some people have civilized debate while I waited in line. There were anti-protesters too, holding signs of their own (“Competition is good. So let the government compete” or “Death panels already exist. They are the insurance companies,” for example), who drew loud cheers from people waiting outside the Target Center.

As I said, I got there at about 9:30 and I didn’t get in until about 10:45, seeing as how everyone had to go through airport-like security. Once inside, I was greeted with even more lines to get into the seats. Anyone familiar with the Target Center knows you pretty much go around in a circle on whatever level you’re on until you get to the section of seats you want to get to. I was told to keep going left until I got to the end of the line, but by the time I reached the end of the line I was already exactly where I began (i.e. the start of the line). Not cool. So I just went in whatever section everyone else was going in. I got decent seats the first time around–facing the President directly–but I was behind the camera stand for the media outlets, so I tried to find better seats. I was got pretty lucky on my second try, and I found seats about 50 yards or so from where Obama was speaking sort of to his right. I could see him fairly well so that was pretty cool. Surprisingly, everything started on time. During the wait, the crowd (about 15,000 people, apparently) did the wave for several minutes (fun to watch) and went through several chants. Not as boring as I thought it would be, as I barely got to read the book I brought for the three hour wait.

So what did President Obama have to say? I took a few notes but not many, so I’ll try to remember (I’m sure the speech is somewhere on YouTube). He started humorously by saying he needed to get to the important things first and mentioned the Gophers game going on later that night in opening their new stadium. They were playing Air Force, so he said he had to be careful what he said because they were flying him back later on. He then made an obvious jab at FOX by saying, “You may have watched So You Think You Can Dance, but I gave a speech to Congress a few days ago…” (Fox decided to air the reality dance show rather than his address to Congress on health care reform.) I thought it was funny (as did the crowd). Obama made the point that while is not the first president to champion health care reform, he is dedicated to be the last.

I’m not exactly being chronological here, but it seems to me his main goals he pointed out were to make it illegal for insurance companies to to deny or cut coverage for people with “pre-existing conditions,” to water down coverage when people get sick or need it the most, or put caps on coverage over a period of time. That’s all well and fine, I think. He said neither government bureaucrats nor insurance company bureaucrats should decide when to cut coverage. He said we should end subsidies to insurance HMOs that don’t improve health care. He pointed to Minnesota as a leader in health care, citing the Mayo Clinic as an example. His dismissed his Republican critics who he said were playing politics and were bickering; he said Social Security and Medicare were criticized as “socialism” too when they were introduced. He then said there should be mandatory screenings for things like breast and colon cancer because it will save money (because it will catch it earlier). That seems dubious, because now you’ve got to screen everyone who doesn’t have the cancer, and that costs a lot of money; but if it increases detection, that’s a good thing. Even more dubiously, he said he won’t pass any bill that adds a dime to the deficit or debt. I’m guessing whatever kind of reform he wants to see is going to cost a lot of money. Surprisingly to me, he mentioned the public option, which he said made sense. He compared it to public universities (like SCSU), saying it increased competition and created affordable and good results without pricing private universities out of the market. He then ended with a personal story about being “fired up” and “ready to go,” and asking Minnesotans if they were fired up and ready to go on reforming health care.

In all, I thought it was a great speech. President Obama is truly a great orator, and this is apparent when you see him speak live. He motivates the audience and he reacts to them too; his speech did not seem obviously canned. There were some things I might have questioned, but I think for the most part he provided some very good points. I think it’s fairly obvious there are things that need to be changed, whether we agree with the President or not. Making something as essential as health care more affordable is, I think, a very important objective that America must meet.

Economic growth and tax rates. Tuesday, Mar 3 2009 

Professor King Banaian of the SCSU Economics Department has an interesting post on his blog, here. The Organization for Economic Cooperation and Development (OECD) has tables of value added taxes in effect in OECD countries. King’s contention is that if we go ahead with planned tax rate hikes that could possibly put our top marginal rate at 50%, we’d be near the same rates as Italy and France, which are ranked low for 1988-2007 average GDP growth rates. Do the tax rates have any bearing on OECD GDP growth rates averaged over the past 20 years? The data does not make a compelling case for this argument: data3

The x-axis represents the OECD rank in economic growth. If the tax rates decided the growth rate, the higher ranked countries (1, 2, 3, etc.) on the left would have the lowest tax rates, and the lower ranked countries (28, 27, 26, etc.) on the right would have the highest tax rates. That’s not the case. (Or is my analysis of the data incorrect?)

Update: And here’s the graph not made at 2 AM, with regression line. Unfortunately, I can’t get WordPress not to crop. Hmm..
data6

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