Henry Quillen's Weblog

2003-12-08T08:26:00.000-08:00

Taking Back the Tariffs

United States Trade Representative Robert Zoellick has announced that the U.S. will drop its illegal tariffs on steel, but not because we were in line for massive retaliation. Instead, he claims, an "independent" process led to this sage economic decision. Some, including Brad DeLong, have accused Zoellick of lying "through his teeth", but I think it's more interesting to take him at his word and see what this implies. Assuming that the USTR went through a thoughtful, independent process free of political considerations that found steel protection was no longer necessary, how should we view his vigorous efforts to keep them in place during WTO dispute settlement procedures? There are three possible answers.

Blatant protectionism: During the appeals process, the USTR finds that the tariffs had done their job. Nevertheless, not believing in the value of free trade, he works to preserve them anyway by appealing the WTO's decision and then denouncing his loss on appeal.

Ignorance: Shortly after aruging its case, the office of the USTR finds that the tariffs did not need to be continued, leaving us all to wonder why he would argue so vigorously without a basic understanding of the underlying economic situation.

Making a point: The USTR realizes that the tariffs are no longer necessary (not mentioning this discovery to anyone), but pursues the appeal because he feels that the tariffs are legal, and would like to be able to impse them in the future minimal fuss.

The last scenario is the most favorable, but also the least plausible. I'm not sure I believe any of them, though.

2003-12-05T17:16:00.000-08:00

Keeping Score 2

Treasury Secretary John Snow predicted that the economy would generate 200,000 jobs per month, on average, between 3rd quarter 2003 and 3rd quarter 2004. October's job creation figure has been revised upwards by 11,000 to 137,000. In November, job growth was 57,000. We are now 206,000 jobs behind, and need to average 221,000 new jobs per month to reach the goal.

Update: it just occurred to me that I have been using the most widely reported jobs figure, which is non-farm payrolls. Next time around I'll throw in some of the other numbers. For instance, the number of self-employed people is growing, but it's hard to tell how many are making any money from their self-employment.

2003-12-03T18:21:00.000-08:00

Coming Soon

Between my workload and Thanksgiving, I haven't written much. I'm eagerly awaiting the Bush administration's decision on steel tariffs. Hopefully there will be something worth writing about on Saturday.

2003-11-25T18:13:00.000-08:00

Is Child Molestation Funny?

Last night, Jay Leno did a segment with Gilbert Gottfried playing the boy at the center of the latest Michael Jackson scandal. A typical joke went something like this:

Leno: What did you do while you were at Michael Jackson's house?
Gottfried: We would watch Malcolm in the middle.
Leno: That's a popular television show.
Gottfried: It's a show?

It wasn't until today that I realized that Michael Jackson's life has become so surreal that we can even forget not to make fun of alleged molestation victims. (To some extent, this phenomenon has happened already with the bizarre episode of Catholic priests). How many letters would NBC receive if Leno made fun of an average victim of child abuse? How many jokes about Lacey Peterson's son has he told?

The other lesson in all of this, is "Don't let your child spend the night with Michael Jackson." It's approximately as negligent as letting your child play on train tracks.

2003-11-23T15:21:00.000-08:00

More about Regional Free Trade Agreements

Pure economics concerns aside, do regional free trade agreements foster more open world trade? The answer: again, it's hard to say. The reason is that there are perfectly plausible arguments on each side.

A proponent of regional agreements will tell you that countries coming together increase the incentives for others to join. So when Guatemala sees NAFTA happen, it will realize that Mexico is now a tougher competitior for exports to the United States. Soon, it will do what is necessary to obtain the same arrangement Mexico has. Eventually, you ge the Free Trade Area of the Americas. This process keeps happening until the entire world has very low barriers to trade.

On the other side of the debate, we hear that large trading blocs can actually derail negotiations in bodies like the WTO, which requires consensus to pass almost anything substantial. With alliances set, countries will not feel the need to concede to other areas, and the process of trade liberalization breaks down.

Which is correct? I'm sure they both are, to some extent. It seems to me that being able to find opportunities in agreements like the FTAA makes the alternative to WTO agreements a little more attractive, and thus makes the negotiation process more difficult. In the end, though, only time will tell.

2003-11-19T21:33:00.000-08:00

What You Need to Know about Regional Free Trade Agreements

I don't want to be the millionth person to write about free trade and how great it is. In short, free trade tends to produce net gains, but managing the process is tricky. It is not clear that trade causes a "race to the bottom" in environmental or labor standards.

However, as negotiations on the Free Trade Area of the Americas go on and protesters get shot in the face with rubber bullets, we need to ask ourselves, "How do free trade areas, like NAFTA, affect countries inside and outside the agreement?" As it turns out, this is a much harder problem to solve than whether lowering tariffs worldwide would make us better off. Why is it so difficult? There are several reasons, but the most interesting one involves trade creation and trade diversion.

We tend to think that removing market imperfections always makes us better off, but it turns out this isn't necessarily true. In 1956, Richard G. Lipsey and Kelvin Lancaster formulated the "theory of the second best", which says that removing some imperfections and leaving others intact may not actually improve welfare. How does this relate to trade?

Imagine three countries: the United States, Mexico, and China. Both Mexico and China would like to sell bicycles to the US. China can sell as many bicycles as the US needs for $100 each. Mexico can also make as many bicycles as the US needs, but for $110. At the outset, we put a 20% tariff on bicycles, regardless of national origin. We buy all of our bicyles from China, and the government pockets $20 on each one. Now we sign NAFTA, and the tariff on Mexican bicycles disappears. Consumers who were spending $120 for a Chinese bicycle switch to the $110 Mexican bicycle. Pretend that bicycle consumption doesn't change much with price. For each bicycle, the consumer is $10 better off, while the government is $20 worse off. Overall, the United States has backed into a raw deal. Mexico seems to be doing well; demand for their bicycles has exploded. China is definitely worse off; demand for their bicycles has collapsed.

Before drawing too many conclusions, realize that this is an oversimplified case. In reality, the US will have a domestic bicycle industry, and bicycles themselves will be differentiated. In the real world, the results of regional trade agreements are often not obvious. People who realize this might not be surprised that the Carnegie Endowment for International Peace has found that NAFTA hasn't had profound effects on the US or Mexico in its first ten years. My gut tells me that it slowed the departure of Mexican jobs to China, but I have no solid evidence to back that up.

There are so many moving parts to keep track of when thinking about free trade. By Saturday evening, I'll write about some of the other issues surrounding regional trade agreements and their consequences.

2003-11-18T16:15:00.000-08:00

More Steel

Here's where the administration stands on steel, and why it doesn't make much sense.

2003-11-13T21:03:00.000-08:00

Roy Moore Gets Exactly What He Deserves

Roy Moore is no longer the Chief Justice of the Supreme Court of Alabama. Read the New York Times article here. The Court of the Judiciary's ruling is here. Alabama gets many chances to define itself. The last chance, the tax reform package that went down to defeat by a 68-32 margin, defined Alabama very badly. I'm very curious to see what Roy Moore decides to do with himself now. If he is not disbarred, he could run for the same job again in 2006. Re-electing him (or electing him to Congress or the governorship) would say a lot about Alabama once again.

I sometimes wonder if Moore's supporters ever think down the slippery slope to imagine what the country would look like if their view, that deference to the Judeo-Christian God could overrule the Constitution. Judges, Christian and Jewish, would be nothing more than Pharisees, a group for which I'm sure Roy Moore and his supporters have no particular love. Parents could legitimately lose custody of their children for not being circumcised, or for worshipping Vishnu. With no Constitutional authority, we would find not the orderliness of religious belief that Roy Moore certainly desires, but absolute anarchy. That people so knowledgeable (and Roy Moore is a very knowledgeable person) can be so myopic blows my mind.

2003-11-12T07:54:00.000-08:00

Dems and the Flag

Wesley Clark has announced that he supports an amendment to ban flag-burning. While I disagree with this stand, I was struck by a statement John Kerry made about flag-burning, quoted in a Boston Globe article:

If I saw someone burning the flag, I'd punch them in the mouth because I love that flag, but the Constitutiton I fought for preserves the right of free expression.

So here's the difference: Clark wishes that the government were able to enforce legitimate laws against flag-burning. Kerry would violate the law by committing assualt and battery, based on his response to what he claims is a constitutional right. Am I the only one scratching my head here?

2003-11-10T18:45:00.000-08:00

Man of Steel

Today, the WTO ruled on appeal that the United States' steel tariffs are illegal, possibly allowing Europe to retaliate within weeks. How did we get to this point?

Section 201 of the Trade Act of 1974 allows the United States to take temporary protectionist measures when imports suddenly threaten a domestic industry. Similar language was written into the GATT and WTO for a very good reason: who would sign on to an agreement that requires him or her to sit idly by when unusual market forces ravage the domestic economy? There are standards for this sort of action, though. The International Trade Commission (USITC), an appointed body, must first find that increased imports are, or threaten to be, a "substantial cause of serious injury".

Here's what happened, as reported in a brief by Gary Clyde Hufbauer and Ben Goodrich: When the USITC found that 12 categories of steel imports satisfied these criteria, the United States placed tariffs, ranging from moderate to prohibitive, on 10 of these 12 categories. When several countries took the matter to Dispute Settlement at the WTO, the result was a ringing defeat for the United States. What did the WTO decide?

In all 10 categories, the United States could have foreseen import changes when trade deals were signed with these countries ("Unforseen developments" are required for relief under WTO rules). In all but one of the 10, the WTO found that the USITC did not show that imports caused the steel industry's problems. In fact, in half of the cases, the WTO found that the USITC did not even show that imports had increased. In all cases, the WTO found that the USITC had determined injury based partly on imports from countries we chose not to protect ourselves from (namely Mexico and Canada). In effect, we levied total punishment against a subset of the offenders. For all of these reasons and a few more, the WTO found overwhelmingly for the complainants (the other countries). On appeal, a couple of findings were reversed, but nothing changed overall.

This is where we stand: if the administration chooses to keep the tariffs in place, it will hurt not only those who consume steel (e.g. Caterpillar, and every consumer in America), but those in industries that Europe plans to target. Not being dummies, Europe is going after high-profile industries in key election states. The response will be a litmus test for the administration on what was supposed to be a quintessential Republican issue: free trade. As a supporter of free trade, I hope we do the right thing. I'll keep you updated on the result.

2003-11-08T12:46:00.000-08:00

Keeping score

If the employment picture is worse than the administration predicts, I'm going to post it. If it's better, I'm going to post it. Here's the benchmark (low as it is): Treasury Secretary John Snow predicted that the economy would generate 200,000 jobs per month, on average, between 3rd quarter 2003 and 3rd quarter 2004. In October, the economy created 126,000 jobs. Therefore, we are 74,000 jobs behind, and need to average 207,000 jobs per month to reach the goal.

2003-11-05T12:48:00.000-08:00

Rock the Vote

Most news articles about last night's candidate forum center on the argument about Howard Dean's remarks about being the candidate of people who display the confederate flag in their pick-up trucks. I just want to talk about the end of Wesley Clark's commercial, in which he is talking about his positions with a group of young people. He closes with something to the effect of, "And I don't care what the other candidates say, Outkast is not breaking up. Andre 3000 and Big Boi just cut solo albums, that's all." Then he gives a pound to one of the young people. Hooray for humor.

2003-11-03T13:05:00.000-08:00

What to do about this Economy?

The other question asked about criteria for fiscal packages, given current economic conditions. My answer:

Dear Mr. Undecided Senator:

During the next few months, you will see various economic proposals designed to lower the moderate unemployment rate, reduce future budget deficits, stimulate economic growth, or achieve some combination of these three goals. You should support proposals whose size and structure suit the nation’s economic problems, that provide relief to those who need it most, and that do not unnecessarily sacrifice future economic growth.

Size and composition: Last week, the Bureau of Economic Analysis reported that the real Gross Domestic Product grew at an annualized rate of 7.2%, the highest since 1984. Clearly, it is no longer appropriate to face our economic challenges with tools built for recessions. New proposals that increase the projected deficit in 2004 and beyond in the name of economic stimulus have come too late to be useful. On the other hand, we must not threaten the nascent recovery with programs that attempt to reduce the budget deficit too quickly. Consumers are fueling the current recovery while facing record personal debts , and contractionary fiscal policies could stall this behavior. The size, then, of an economic package is not as important as its short-term deficit neutrality; at this time, it would be imprudent to raise or lower next year’s deficit significantly. This will affect the revenue and spending composition of any package, as revenue measures should offset spending changes.

Balancing spending and revenue measures: First and foremost, you should evaluate economic packages by the appropriateness of their spending and revenue measures to the problems at hand. Appropriateness is a tricky concept, and may involve tradeoffs. First, ask the question, “Is this package likely to increase employment and economic growth while keeping the budget deficit under control?” Corporate tax credits for hiring new workers, offset by higher personal income taxes or spending cuts, fulfill these objectives. Lagging business investment may make depreciation credits more attractive than lowering the corporate income tax rate, and tax cuts for those most likely to spend the money will stimulate the economy more than cuts for those who will simply buy Treasury bills. Second, ask, “Does this package offer help to those who have been affected most severely by the slow economy?” Creating lower or negative income tax brackets with advanceable credits would provide relief to those struggling in the poor economy. Reducing dividend taxes or the highest marginal income tax rates would not.

There will always be tradeoffs between these goals of equity and efficiency. Extending unemployment benefits exemplifies the dilemmas you will face. Because it reduces the incentive to find employment, extending benefits is unlikely to increase employment or reduce the deficit. However, it definitely helps people facing difficult situations. When making these decisions, then, you should also consider the long-term impact of an economic package.

Short-term and long-term considerations: Just as credit card debt can affect a family’s finances for years, deficits designed to solve a specific, finite problem can grow out of hand and harm long-term growth. Most of the pertinent short-term considerations have been discussed above: increasing GDP growth, building consumer confidence, and encouraging businesses to invest in capital and new workers. In the long term, you must be careful to avoid unintended consequences of your short-term policies.

Avoiding persistent budget deficits is imperative. The very existence of persistent deficits reduces long-term GDP growth. Increases in private saving tend not to compensate fully for decreases in public saving, so budget deficits cause national saving to fall. Lower national saving leads to a combination of two factors. The first is higher domestic interest rates. Because borrowers are chasing a smaller pool of national saving, the price of that saving, the interest rate, will rise. This will depress economic activity, as businesses will not pursue projects without high rates of return. The other factor is increased foreign investment. To finance our debt, we will sell assets, such as businesses and capital, to foreign companies. Although Americans may continue to work in these businesses, the after-tax profits will leave the country, where they cannot contribute to long-run economic growth.

These deficit considerations are especially acute now, with the impending retirement of the Baby Boom generation. Absent major changes in Medicare and Social Security, payroll taxes, which had covered the cost of these programs with money to spare, will no longer be sufficient. As a result, we will be forced to fund these entitlement programs with general revenue, making budget deficits worse. Any proposal you approve should deal realistically with this eventuality. For example, tax cuts that “sunset” before the Baby Boomers retire are preferable to permanent cuts.

Finally, you should evaluate the likely effects of economic packages on long-run productivity. Specifically, focus on education and research and development. Plans that stimulate the economy in the short run and stay deficit-neutral by gutting federal support for education may eventually produce a workforce incapable of using advanced technology and discovering breakthroughs. Similarly, plans that pay for stimulus by reducing tax credits for research and development, or federal funding for basic research, may decrease potential GDP growth by reducing future productivity.

Summary: Choosing the best economic stimulus plan is not a simple operation. You must balance the competing claims of businesses and consumers, wealthy and poor citizens, and current and future generations.

2003-11-03T12:58:00.000-08:00

Is Big Business a Threat to Democracy?

Question one of my midterm asked for a response to the following except from Ralph Nader's 2000 Green Party nomination acceptance speech:

Over the past twenty years we have seen the unfortunate resurgence of big business influence, generating its unique brand of wreckage, propaganda and ultimatums on American labor, consumers, taxpayers and most generically, American voters. Big business has been colliding with American democracy and democracy has been losing.

Here's my answer:

The relationship between business and government has changed significantly over the last twenty years. Elections are more expensive, the federal government is more transparent, and news sources have evolved. While all of these developments have created opportunities for businesses to influence government decisions, non-business groups have effectively mobilized to take advantage as well. Ralph Nader, therefore, overstates his case by ignoring the context of “the unfortunate resurgence of big business influence”. Nevertheless, many large companies can and do issue ultimatums and cause wreckage, especially at state and local levels. This essay will examine the source and nature of business’s threat to democracy, and the forces that work to keep that threat in check.

Money may have always been “the mother’s milk of politics”, but its role has grown over the last twenty years for several reasons. PACs have facilitated election contributions, and have mushroomed in size and number; PACs contributed $430 million to congressional candidates in the 1996 election cycle, up from less than $23 million in 1976. Although PACs provide an outlet for businesses to finance election campaigns, labor groups have used PACs significantly; of the top twenty PAC contributors to federal candidates in the 2002 cycle, unions funded twelve, accounting for 57% of the value of the top twenty contributions.

Soft money contributions have seen similarly spectacular increases, skyrocketing by 475% from the 1992 election cycle to the 2000 cycle. Unlike PAC funds, soft money comes more from businesses and individuals with strong ties to business. Labor groups accounted for only six of the top twenty soft money contributors in the 2002 cycle, comprising just 31% of the value of those donations. However, this window of opportunity for business may have closed substantially with the new McCain-Feingold campaign-finance reform act. Depending on the Supreme Court’s upcoming ruling, business could find itself unable to influence elections through soft money contributions.

Evolving government processes have created non-financial opportunities for business and other groups to influence decision-making as well. The federal government has continued to grow in size and scope over the past twenty years, creating more points of access for interest groups. Open committee meetings and three channels of C-SPAN, which began broadcasting in 1979, allow lobbyists and other interested parties to monitor legislators. These changes have created incentives for businesses to mobilize and lobby. The Business Roundtable was founded in 1972 to analyze business and economic issues and to provide a strong, united front on issues important to about 150 top CEOs.

Businesses are not the only beneficiaries of open government, however. Relatively new groups such as The Business Roundtable and existing groups such as the U.S. Chamber of Commerce and The Business Council must compete for access and influence with AARP, PETA, and other organizations with burgeoning memberships and financial resources. AARP is the nation’s second-largest organization, and PETA’s membership grew 17-fold from 1984 to 1994. These groups and others like them are often hostile to traditional business interests, and wield substantial political clout. Additionally, the extent to which lobbying pressure and campaign contributions influence legislators’ votes is never entirely clear. Elected officials remain ultimately accountable to individual voters, and hesitate to upset their constituents.

Despite the picture of gridlock and countervailing forces painted above, media consolidation and the proliferation of cable and internet news provide new opportunities for large companies to threaten democracy by limiting access to information. In an era of declining newspaper readership, nearly all national television news broadcasts are controlled by five companies with combined annual revenues over $230 billion. Wariness of business influence in broadcasting has united liberals, conservatives, and moderates; when the FCC proposed loosening rules on media consolidation, most of the 520,000 public comments were negative. This controversy should continue for some time. Because television and radio news are for-profit enterprises, choices about issues and candidates to cover will always be, to some extent, business decisions.

Big business can exert influence at the state and local level in a very different way. Businesses that recognize their importance to the local economy can use promises and threats to win favorable government treatment unavailable to smaller enterprises. Ralph Nader speaks of ultimatums, referring to deals like New York’s $900 million dollar package to keep the New York Stock Exchange from moving to New Jersey, which he cites among a laundry list of payments and tax abatements in New York alone in a 1999 New York Times Op-Ed. Nader is also concerned with the trend towards free international trade, supported by big businesses, which, he claims, allows companies to ship jobs overseas. Trade’s effect on the decline in United States manufacturing employment is debatable, but it does give large employers a powerful card to play when negotiating with state and local governments. At the bargaining table, governments of cities without diversified economies, such as Flint, Michigan, are aware of large companies’ power to create wreckage. However, it is unclear that this is a phenomenon of the last twenty years alone, or that recent developments have made it any more prominent.

As businesses have found new ways to influence democratic institutions over the last twenty years, they have often found themselves thwarted by parallel rises in citizen group activity. While they retain powerful influence through the media, it is not obvious that business represents a graver threat to democracy now than it has in the past.

I'm having trouble posting the footnotes in HTML, so rest assured I didn't rip any of this off. It's properly cited somewhere, if that's good for anything.

2003-11-02T09:16:00.000-08:00

Unprecedented

On Friday I saw "Unprecedented: The 2000 Presidential Election", followed by a panel discussion with the filmmakers. The documentary, which has received a slew of film festival awards, concentrates on voter purges before the Florida election, and the recount battle afterward. As you might expect, the film has a strong "vast right-wing conspiracy" bias. To me, the film advanced its points less effectively when dealing with the recount; in my opinion, both sides wanted to win at all costs. The information about how voter purges were conducted before the election, however, is fairly damning.

Florida hired Database Technologies to purge voter rolls of felons (sounds fine so far), but made two crucial decisions: after Database Technologies warned the offices of Katherine Harris and Jeb Bush that the methodology the state demanded would cause several innocent people to be named felons, they were told that that didn't matter, and to cast a wide net. If a felony conviction date was listed as 2007, they were told to blank it out. In addition, felons from other states who had their voting rights reinstated before moving to Florida were purged from voter rolls, clearly in conflict with state law. These people vote over 90% Democratic.

In an election as close as Florida's, every mistake or wrongful act can be labeled as the deciding factor. If Republicans and Democrats can agree on anything after watching this movie (the discussion at the end of the film involved the first shouting match I have seen at the Kennedy School), it is that party control over the election apparatus begs for humiliations like Florida's. I hope at least a few states are trying to find ways to put elections in independent hands. If not, the new Diebold machine elections could become the next Florida.

2003-11-02T08:29:00.000-08:00

Good Iraq Articles

There are a couple of recent articles explaining why our experience in Iraq isn't a bed of roses. Last week's New Yorker article by Seymour Hersh fills in some of the oh-so-familiar details behind the use and misuse of intelligence information. I'm not sure if it can still be found on the web for free, though. Today's New York Times Magazine talks about planning for the war itself. I haven't read this article yet, but I will as soon as I finish my midterm.

My take-home midterm for "The Business-Government Relationship in the United States" consists of two essays, one responding to Ralph Nader's criticism of big business's influence on democracy, and another about budget considerations in an age of large deficits and moderate unemployment. I'll post my answers tomorrow, giving this blog six extra pages of content with no extra work.

2003-10-30T19:18:00.000-08:00

What's up? Third Quarter GDP.

As all the up-down economists have breathlessly reported, real GDP rose at an annualized rate of 7.2% in the third quarter. This is an "advance" figure, and will be revised on November 25th. Most smart people are now asking the question, "Is this enough to put the economy back on track?" I'm not sure, but I will look at where this growth came from.

The lion's share (4.66 of the 7.2 points) was personal consumption expenditures. I suspect this gives economists the most pause; personal consumption expenditures have grown faster than personal income (though not disposable personal income) every month since May. The jolt of new tax breaks may be done working its way through the economy already.

Next comes some good news in investment. Fixed investment accounted for 2.04 of the 7.2 points, while inventory changes actually dragged down the GDP rate. So, we are not building high levels of inventory that could cut back growth in the near future.

Exports provided some good news as well: after dragging down growth for the last few years, net exports chipped in 0.84 points, and a dollar falling to a reasonable level should keep this trend going.

Government spending is a little more worrisome. Defense spending increases accounted for over half of the second quarter's 3.3% growth, and contributed nothing to this quarter's growth. To me, this means that growth is still artifically high to the tune of 1.7 points, and putting military spending back in line over the next couple of years will let some air out of the bubble (which is not a bad thing in the long run; it's certainly preferable to higher deficits). By the way, if this interpretation is way off, please let me know.

Of course, none of this is a great cause for celebration if people don't find jobs (and not just the oft-cited three million--there are millions more who have left the labor force or call themselves self-employed while sitting on the couch). If productivity numbers, released next week, are astronomical, we might find ourselves waiting for a long time for the labor market to improve.

I feel like I've just auditioned to be on CNBC.

2003-10-29T11:47:00.000-08:00

Leveling Down(?)

What is "leveling down", and is it relevant to policy?

We were discussing egalitarianism in one of my dicsussion sections yesterday, and had drawn a stylized graph representing an unequal distribution of resources among people in a society. When the TA redrew it to represent the result of an income redistribution, with the highest person a little less high, and the lowest people a little less low, one student objected, claiming that the dynamic nature of society will cause "leveling down", stating that average resources will fall as long as "any kind of socialism" is in force.

I don't want to put many words in his mouth since the discussion was cut short, but he seemed to group progressive taxation with "any kind of socialism". Of course, federal income taxes have been progressive since they have existed, and real income at every level has been growing fairly consistently since (although real wages for the bottom quintile have barely budged for 20 years; I'm not prepared to say whether this has anything to do with the drastic reduction in the top marginal tax rates in the 1980s). I am perfectly willing to believe that progessive taxation can cause certain distortions (although with a top income tax rate of 35%, I don't believe they are severe), but to suggest that they not only reduce long-term income growth but actually lower income is, of course, preposterous. Again, I don't want to jump too harshly on a view that was not explained to me fully, but do these kinds of arguments actually pass for reasoned discussion these days? I hope not.

2003-10-28T09:05:00.000-08:00

Al Sharpton's Wit for President

Last night at the Kennedy School, we had Al Sharpton one-on-one with Chris Matthews for "Hardball". Sharpton was quick: when asked why so many leading blacks are Republicans (Condoleezza Rice, Colin Powell, Clarence Thomas), Sharpton didn't miss a beat, making the distinction between leading blacks and black leaders.

It's a shame that his entertaining and occasionally incisive rhetoric has absolutely no solid foundation in understanding federal policy. To pay for the obligations created by his four(!) new constitutional amendments, including a right to health care, he said that he would go after corporate tax avoidance, which costs the county "trillions" of dollars. In 2002, the federal government collected $148 billion in corporate tax receipts. Of course, Sharpton did not specify a time frame. Even if we're generous and allow him the 10 year window that is generally the maximum for the OMB or CBO, Sharpton asserted that cracking down on corporations would more than double collections.

No other candidate in the field would have made a mistake this ridiculous, yet no other candidate has Sharpton's spark, either. Hopefully, within the next decade, we can find a candidate who has Sharpton's passion and sense of humor, but who actually has skills the Presidency requires.

2003-10-26T18:38:00.000-08:00

Score One for Kucinich

In tonight's Democratic debate, Dennis Kucinich was asked how he planned to be the first person elected directly from the House of Representatives to the presidency since Abraham Lincoln. Kucinich claimed that the last person to accomplish the feat was actually James Garfield. So who was right? According to Encarta, Kucinich was. It's a little confusing, since Garfield had been elected to the Senate in 1880 while still serving in the House. So cheers to Dennis Kucinich for knowing his Ohio history, and a raspberry to Fox News, which is allegedly fair and balanced, but not accurate.

Of course, I still wouldn't vote for Kucinich in a million years.

2003-10-26T09:23:00.000-08:00

Speaking of Streets...

Yesterday, I thought I had reached the end of Central Street in Manchester, New Hampshire. As I walked up to a house to leave a flyer, I saw that the road did not end, but had been torn apart and overgrown right in the middle. Did residents just decide they didn't want a thru street anymore? I don't know, but it reminded me of a good site, The Lost Highway, which has pictures and stories of abandoned roads.

I'm a fan of abandoned places, but I don't have the time or motivation to visit many of them. There's just so much out there, though. A fun place to start is with Cincinnati's abandoned subway. If you know any other good ones, let me know.

2003-10-26T07:54:00.000-08:00

Takin' It to the Streets

Yesterday morning I dragged myself out of bed at 5:15 to head to New Hampshire, where Wesley Clark was officially opening his Manchester office. We heard the General speak, shook his hand, and went out to canvass. My partner and I knocked on about 35 doors of consistent Democratic voters and only got 5 people to answer. I assume that many people were home but tired of hearing campaign pitches.

If this is true, it highlights one of the sad consequences of a drawn-out primary season: residents in New Hampshire and Iowa can barely escape engagement with those who would lead the country, while states with late primaries get little attention. Just as economic policies that limit free markets usually do not kill the market but introduce distortion, paying attention to small homogenous states because they have early primaries distorts the concerns and message of candidates.

Can candidates race towards the center for the general election, papering over the distorted messages of the primaries. I think so, but with two caveats. First, a candidate can only come back so far. Commitments are commitments, and a candidate who has told an Iowa office that he wants gosohol sold at all gas stations within ten years can hardly say, "Just kidding!". Second, and more importantly, the best candidate may not be in the general election at all. Given Howard Dean's standing in national polls, I have no doubt that his enormous lead in New Hampshire is substantially influenced by geography. I am surprised that we have not seen popular New Hampshire and Vermont politicians running for President in the past.

So, should we have one day of primaries nationwide? Is there a better way to fix the system? Or is the system not even broken in the first place? These are interesting questions, but fairly academic, since decisions about primaries are made on the state level. If I were a Governor, I would work to put my state's primary the week before New Hampshire. If everyone played "me too", a movement might arise to standardize the system. In the meantime, people will spend half a day driving to and from Manchester to ask five people to vote for their candidate.

2003-10-23T21:19:00.000-07:00

It's October? Time to get those 2.6 million jobs back.

I've been keeping an eye on the labor market and administration projections of job creation. Paul Krugman has a pretty concise summary here. Basically, we need to create 130,000 jobs every month to keep up with the growing labor force, which puts the current administration six or seven million jobs behind. Now the best-case scenario (it's always the best-case scenario when coming from the White House) is that fewer people will be working in November 2004 than in January 2001.

Several months ago, I ran the numbers and found that job creation (since consistent data became available around Truman's first term) under Republican presidents is much lower than under Democratic presidents any way you slice it. If nothing else, President Bush is leading the drive towards greater statistical significance. I'll keep you posted on the job creation front.

2003-10-22T20:22:00.000-07:00

Good News and Bad News for the Administration's Budget

In fiscal 2003, the US government ran a deficit of $374 billion. As recently as July, the Office of Management and budget projected that this number would be $455 billion. The good news: conditions from July through September were better than anticipated. The bad news: the assertion that the President's plan will cut the budget deficit in half within five years just got more implausible. Of course, all of these OMB projections assume that the President will not get his way on most of the major issues he's pushing.

To the extent the President does get his way, will it be clear by mid-2004 that even the country's most optimistic projections show permanent large deficits? The big gap between the OMB and Goldman Sachs forecasts will close eventually perforce, but how? If the President continues to push for tax cuts, the Goldman estimates will be alarmingly prescient.

2003-10-21T17:16:00.000-07:00

Time for Al to Go

I'm anxiously waiting to find out if I won a ticket to see Al Sharpton in next Maonday's episode of "Hardball" at the Kennedy School. I have no respect for him as a politician, mind you, but I think it will be hilarious. That said, Sharpton, Carol Moseley Braun, and Dennis Kucinich need to leave the limelight soon.

That, of course, is not a new sentiment among those who want to give the eventual Democratic nominee every advantage at this point. However, an assumption implicit in these arguments is that the three no-chance candidates will only drop off the radar screen and take debate time from the other six if they drop out. Why is this so? There are 38 Democratic candidates for President. Why are only nine invited to the debate? Beyond any party rules, networks and event hosts are making these decisions. It seems to me that it will soon be time to pull the plug on the bottom three "major" candidates. Those who write the debate invitations should ask themselves, "Does any of these candidates have the slighest chance of coming in 3rd or better in any state primary?" The answer, of course, is no.

Kucinich may protest that he is a member of Congress, and Moseley Braun that she was a Senator, and thus are due special consideration. Al Sharpton, of course, has nothing to rest on but his minor fame. At the very least, then, can we not pare the effective field to eight?

Of course, there is a tremendous flip side to all of this: what if one of the unknown 29 candidates would actually be the best person for the job? We, of course, would never know, since the press gives no coverage to these people. Therefore, the media's power to decide the legitimacy of candidates should not be taken lightly. All of that said, it's time for Al to go (but not before Monday: it's going to be a wild hour).

2003-10-19T19:23:00.000-07:00

The Most Counterintuitive Thing I Have Learned This School Year

If you were president of an underdeveloped country, knowing that your citizens only received three years of schooling on average, what would you do to improve your country's growth. If you said "increase schooling", you may want to think again. A paper by Lant Pritchett talks about the relationship between increases in schooling and economic growth, and it isn't pretty. Increases in schooling have very little to do with GDP growth, and may reduce it.

Why? Pritchett gives three explanations, all of which sound pretty convincing. First, schooling may be so bad that it doesn't translate into better education. Second, demand for skills learned in school may be so low that schooling has severly diminishing marginal returns. Third, countries with manipulable institutions may find that their educated people was to squeeze money out of favors from the government rather than building the economy.

In the end, this is but one example of a general theme I've learned in my development class: fixing developing countries' problems is extremely complicated and country-specific. I'm not sure if I'll ever be deeply involved in it, but I'm glad that there are people who will.

2003-10-17T19:18:00.000-07:00

But I Thought I Would Be Happy...

I just spent half an hour with psychology professor Daniel Gilbert, talking about his work on affective forecasting. Basically, he has found that people's predictions about how happy or sad they will be after a certain event turn out to be overstated. We eventually brought the discussion around to economic policy.

An economist studying the utility of wealth has found that higher incomes are strongly correlated with higher happiness up to a point, at which happiness levels off almost completely. Before you read on, guess what that point is (in annual income).

Well, it turns out the answer is forty thousand dollars. I'm sure there are regional adjustments for costs of living etc., but it's not a very high number. When we combine this fact with Professor Gilbert's work, some interesting fiscal policy questions shake out. For instance, repealing the inheritance tax has substantial support in the United States, even though very few people end up paying it, while everyone else enjoys the government services paid for by it. Why the disconnect? Many people, no doubt, perceive a fundamental unfairness in taxing income twice, leaving people unable to pass on their wealth exactly as they see fit. (Whether this is actually unfair is a topic for another discussion.) However, many people take two leaps of faith: I'm not wealthy now but I/my parents could be a multimillionaire, and I would be very upset if I could not bequeath/receive the full amount of that fortune.

As it turns out, both of these are probably wrong. Similar arguments work for higher marginal tax rates for extremely high income earners, and no doubt many other fiscal situations. What implications follow for fiscal policy? It's awfully hard to say. If nothing else, it reinforces my faith in progressive taxation as a vehicle for social good. In the long run, it should affect the calculus of growth vs. equality. Some taxation policies will eat away at long term growth but leave the least of us better off (of course, this is nothing new, as we do it right now). The implication, though, is that we shouldn't have second thoughts about it if extra wealth means little to a significant percentage of Americans.

If I don't stop here, I think I'll be going in circles all night.

2003-10-15T19:46:00.000-07:00

Let's Go Cubs!

I've been a little apprehensive about the prospect of the Cubs being in the World Series (especially against the Red Sox), for fear that the city of Chicago would be ripped apart. Now I'm all for it, because of the fan who prevented Moises Alou from catching that foul ball in the 8th inning of Game 6.

I believe that a single word spoken against him is unfair, much less the assaults he received at the game and may continue to receive forever. Even beyond my concern for this man is my desire that the people of Chicago not confirm my worst suspicions about human nature. I'm not even sure what to say to the type of person who would take a minute out of his day to call the fan's home or a talk radio show to blame him.

Things happen in sports. Cubs fans should take a lesson from short track speed skater Apollo Anton Ohno. When a crash caused by another skater not only cost him a gold medal but resulted in a leg gash, he said, "That's short track." Come on, Cubs fans. That's baseball.

2003-10-13T18:05:00.000-07:00

The Red Sox and John Edwards Play Hardball in Boston

Tonight I watched a live taping of "Hardball" at the Kennedy School of Government. I'm not sure how the Institute of Politics pulled this off, but at least four of the other Deomcratic presidential candidates will show up on consecutive Mondays to go toe to toe with Chris Matthews.

So how was Edwards? About as charismatic as I expected (that is to say, quite charismatic). Try as he might, it was hard to distinguish his position from the administration's since he still believes that Saddam Hussein posed a threat to American security because of his intent to pursue nuclear weapons. When talk turned to the economy, he stressed higher taxes for those earning over $200,000, and that was about it. It's no surprise, then, that Edwards is doing so horribly in the polls (trailing even Al Sharpton). His economic plan is about the same as everyone else's (except Dean's, of course), but he sounds a lot like Bush on the war.

Of course, this is also the reason that Lieberman cannot win the nomination. In the interest of full disclosure, I handed out 150 or so fliers for Wes Clark today. Early stumbles aside, I think he has the best chance of winning.

2003-10-12T16:26:00.000-07:00

Pop Quiz, Hotshot

Quick: how many Democrats are running for President next year? How many Republicans? If you're like most people, you answered "I don't know" and "One, I guess." If you've been paying attention, you probably answered "Nine" and "One". But if you had visited Politics1.com, you would know that the correct answers are "38" and "13". If you want to get the basic story on each and every candidate in the 2004 race, this is your first stop. When was John Kerry elected lieutenant governor of Massachusetts? What is Millie Howard's flexible campaign slogan? Where can you find grassroots websites for John Edwards? It's all here; go visit.

2003-10-12T15:47:00.000-07:00

Dick Gephardt's Bizarro Health Care Plan

Well, I'm back online, far beyond the date of July 8 that I promised earlier. Sorry.

I've been looking at the Democratic candidates' economic and health care plans. Given what I know about the candidates, there was only one surprise, but it was a doozy. As it turns out, Dick Gephardt, who ran for President in 1988 and thought about doing so in 2000, no doubt with a stong policy team behind him, has proposed a white elephant of a health care plan and no economic plan at all (actually, his health care plan is his economic plan, but more about that later).

Here's Gephardt's plan, and here's the rationale (in my own estimation): all employers would be required to provide health insurance to their employees, and would receive a 60% tax credit to cover their expenses (compared to the 30% or so currently earned by deducting health care costs from profits). The reason for adopting a mandate is that most uninsured people are employed, making this a giant step towards universal coverage.

The description "white elephant" is doubly appropriate. First, swinging at social problems with tax credits is generally a GOP maneuver. Second, this plan costs a lot, and by "a lot" I mean three times as much as competing plans without providing more coverage. While it has flaws and redeeming points, nothing can save this plan from its greatest failure: it reimburses the vast majority of companies (measured by economic power, at least), for something they are already doing.

Imagine a law firm with 16 attorneys averaging $120,000 per year and 12 other employees averaging $35,000. Because this law firm wants to attract talented employees, it offers two health insurance choices: Blue Cross/Blue Shield, under which the firm pays $6,800 per year on average for family coverage, and costs employees $2,500 as well. It also offers an HMO plan, which costs the firm $6,300 employees $2,100. Let's say all 16 attorneys choose family coverage, 12 from BC/BS, and 4 from the HMO. 8 of the other 12 employees are covered under a family member's plan, 3 elect the HMO, and one declines coverage. So this firm pays $100,500 per year for health insurance, about $30,200 of which comes back to them as tax savings. Under Gephardt's plan, these savings double to $60,400. Now for the silly part: the firm is now required to pay 60% of the total premium costs, but the firm was already paying 75% of the total premium costs. The firm continues to offer the same plans, and pockets $30,200 for doing nothing.

At this point, you might be saying, "For $30,000, this firm can hire another employee, making everyone better off." Congratulations! You've recreated the entire logical framework behind the Gephardt economic plan. Gephardt hopes to get the economy back on track by pumping money back into the economy, largely through corporate giveaways. This is exactly the idea behind "trickle-down economics". Why, then, is it the centerpiece of a Democratic plan? Honestly, I don't know. Maybe one of you does. In the meantime, pull out some envelopes, turn them to the back, and start making some calculations: how much money does Wal-Mart get? I'll start you off: Wal-Mart has 1.4 million employees (not all in the United States), most of whom are already offered health insurance.

2003-06-25T08:10:00.000-07:00

Dean and Capital Punishment

This was too good to pass up. On June 22, Howard Dean said the following on "Meet the Press":

So I just--life without parole, which we have which I actually got passed when I was lieutenant governor--the problem with life without parole is that people get out for reasons that have nothing to do with justice. We had a case where a guy who was a rapist, a serial sex offender, was convicted, then was let out on what I would think and believe was a technicality, a new trial was ordered and the victim wouldn't come back and go through the second trial. And so the guy basically got time served, and he was the man who murdered a 15-year-old girl and raped her and then left her for dead and she was dead. So life without parole doesn't work either.

Dean's argument is that it's no worse for the state to execute an innocent person than to release a guilty person who then takes another life. Now I don't know the specifics of this trial, but it seems like there are two possibilities here. Either the victim's original testimony had nothing to do with the technicality, and thus should have been admitted in the second trial, or the victim's testimony caused the technicality in the first place, meaning we can't hold it against the accused. Either way, what's the problem?

More philosophically, how on earth do we know before the fact that a "technicality" has "nothing to do with justice"? Dean's argument means that when flaws are found in one's due process, grievous enough to demand a new trial, we are better off if the defendant has already been executed. It sure would save everyone a lot of time and effort. Anyway, this breakdown in logical thinking is just stunning.

2003-06-24T14:00:00.000-07:00

On Hiatus

Due to constant traveling, this blog will next be published on or about July 8.

2003-06-07T21:32:00.000-07:00

Today's Sports Disappointments

I read that it's not often a day in June is big for sports. But today was the day of being denied. Serena Williams did not win the French Open, then Roger Clemens did not win his 300th game, then Funny Cide did not win the Triple Crown, and finally the New Jersey Devils did not win the Stanley Cup. What a day!

2003-06-07T12:05:00.000-07:00

What Did the President Know, and When Did He Know It?

Here's a pretty good summary of the discrepancies between the administration's statements on Iraq's WMD capabilities and what the intelligence was actually saying at the time. I'm still trying to make up my mind about how bad this behavior was.

By the way, check out this week's New York Times Magazine. There are some really interesting articles, including this one by Peter G. Peterson, who has been an important Republican for 40 years, but has the courage to realize that the current administration has betrayed a significant portion of Republican ideals.

2003-06-03T10:21:00.000-07:00

Let's Go to Court (Again)!

There's more to Birmingham than Ruben Studdard and the HealthSouth scandal. I'm going to check out Eric Rudolph arraignment today at 3. Details to come.

Update: I didn't get in. They held the arraignment in the smallest courtroom in the building. Only people who showed up two hours or more before the proceeding got in. Sorry.

2003-06-02T08:57:00.000-07:00

An Economic Parable

Two mechanics were working side by side on separate cars that needed similar repairs. During their work, each needed to unscrew a nut that was partially rusted into place. The first mechanic took his monkey wrench, adjusted the size to fit the nut, and twisted it off. The second mechanic took his monkey wrench and began to pound away as if he were using a hammer. Occasionally he would miss his target and damage other parts of the car. When the nut wouldn't budge, he asked to borrow the first mechanic's wrench. He obliged, and the second mechanic again began to smash the wrench against the nut, denting and tearing but not loosening it. Exhausted, he looked at the damage he had done in vain, shrugged his shoulders, and said, "But I was using the right tools!"

Replace the rusted nut with an economic downturn and the monkey wrench with tax cuts, and you get the idea.

2003-05-31T17:06:00.000-07:00

How Badly Has Bush Handled Employment?

Pretty badly. Barring a miracle, by the next election the United States will have fewer jobs than it did when President Bush took office. At first I thought, "I bet that hasn't happened since Carter". As it turns out, I was wrong. As far back as the Bureau of Labor Statistics' records go (1939), non-farm payroll has never decreased over a four-year election cycle. In fact, employment under Carter grew by 12.5%. No doubt numerous studies have been done to look for the factors behind historical job growth patterns, but chew on this: since World War II, job growth under Democratic Presidents has averaged 11.1% from inauguration to election. Under Republicans, the comparable figure is 5.8%. That's a large difference to explain away with one-time historical events.

I'll put the data in a comment under this post.

Addendum: In case you thought this was just a lagging effect (each party inherits the effects of the other's policies), look at the eight terms in which the party in the White House didn't change. In those terms, Democrats keep the same average (11.1%), while Republicans actually see a decline to 5.2%.

2003-05-29T11:17:00.000-07:00

More Budget Dissembling

The administration's proposed budget contains a section detailing the 75-year projected losses of Social Security and Medicare, with the obvious intent of creating an impetus for reform (or destruction, say the cynics) of those programs. However, I noticed in this paper, co-authored by Jagadeesh Gokhale of the Federal Reserve Bank of Cleveland, that the figures presented in the budget in the scariest way possible actually don't take into account the proposed policies in that very document. It should come as no surprise that these policies actually make things worse. I'm not allowed to quote the paper for some reason, so check page 23.

And so the Enron-style accounting continues. The administration misrepresents the actual costs and effects of their fiscal plans, and very few people are willing to call the on the carpet. Serious Democratic candidates should begin harping on this now.

2003-05-25T21:43:00.000-07:00

Can One Be Petty and Pathetic Simultaneously? Yes.

May father pointed this one out: The National Review takes on John Kerry's wife, Teresa Heinz, in a piece here. This is, of course, the magazine whose standards are so high that it bases tax policy arguments on arithmetic mistakes (for details, click here). This passage by Jay Nordlinger is a jewel:

But here's the kicker: Mrs. Heinz Kerry sniffed about the White House, "They probably don't even speak French."
Aside from the delicious hauteur of that comment: How much you wanna bet the lady's French stinks? I've heard it before: rich (American) lady's French. It's not pretty.

I take this to mean that Nordlinger has head "rich (American) lady's French" before, and not Heinz's specifically. If I am wrong, then I can accuse Nordlinger of nothing more than writing some poorly crafted sentences. If I am right, then we will all discover how much Nordlinger enjoys doing basic research.

Here is Teresa Heinz's background, taken from the Kerry campaign's website:

Born and raised in Mozambique, she earned a Bachelor of Arts degree in romance languages and literature from the University of the Witwatersrand in Johannesburg, South Africa and graduated from the Interpreters School of the University of Geneva.

I know how difficult it can be to do in-depth investigative journalism sometimes, especially when you're looking for a nugget of information on a Presidential candidate's official website. Is Nordlinger kidding? I'll take that bet in a heartbeat.

Update: Nordlinger offers a correction here, admitting his lazy error.

2003-05-25T09:23:00.000-07:00

Taxes in My Neck of the Woods

Alabama, like many other states, is facing a large budget shortfall next year. Therefore, it seems as good a time as any to reform our tax system, one of the country's most regressive. Alabama begins taxing income at $4,600, the lowest threshold in the nation. And yet, reflexive anti-tax sentiment is putting any sort of reform in doubt. Read about it here. As the article mentions, there are some places in the state that charge an 11% sales tax, with no exemption for basic necessities. Of course, this problem is not unique to Alabama. I was visiting Tennessee when the entire government shut down because people couldn't not agree to establish any income tax in the state.

In the end, Alabama's voters may decide that there's no problem with taxing the poor at a rate three times as high as the rich. Just as our children will regret the tax cuts passed nationally over the past few years, Alabama's children will regret a decision to damage education, health care, and other services in the name of fighting tax reform that would actually lower the taxes of many who will vote against it.

2003-05-22T20:13:00.000-07:00

Shhh...It's a Secret!

The FCC will soon decide whether media companies can continue the process of local television monopolization. Please read William Safire's column on the subject. Of course, this is a non-story since there's little incentive for television news to pick it up, among other reasons. It's also a pretty good example of government behind closed doors.

Of course, the public can't get interested in every issue, and few people have the time or resources to get involved, but why does this administration have to be more secret than any in recent memory. What a train wreck.

2003-05-20T10:29:00.000-07:00

Warren Buffett on Dividend Tax Cuts

During 1999, when I managed to triple the value of my stock portfolio, I scoffed with hubris at Berkshire Hathaway's underperformance. After relinquishing all of my gains, I realized that Warren Buffett was a genius no matter what anyone said. As we see here, he is a genius with a social conscience. This is the first article I have seen against dividend tax cuts from someone who would reap tremendous benefits from them.

I have an enormous question, though. Will dividend income still be subjected to the Alternative Minimum Tax? If not, everything Warren Buffett wrote is correct. If so, he will pay about 28% of his dividend income, removing most of the force from his argument. Given the huge price tax of this tax cut, I'm giving the benefit of the doubt to Buffett for now.

2003-05-19T15:41:00.000-07:00

Quick Note on Dividend Taxes

The best argument I know for changing the way dividends are taxed is that higher dividend taxes create incentives for companies to rely too heavily on debt to finance their operations. Unfortunately for proponents of eliminating income taxes on dividends, the logical conclusion to this argument is that companies should be able to subtract dividends from net profits, reducing their tax liability. This is not part of the current plan, and thus exposes the most naked attempt to reward the rich under the current plan. When you hear a speech that associates dividend tax reduction with economic stimulus, don't believe the hype.

2003-05-19T15:31:00.000-07:00

Dispatches from the Class Wars

After reading the first paragraph of Thomas Frank's Harper's article, "Get Rich or Get Out: Attempted robbery with a loaded federal budget", I thought that I would agree with 80% of it. If anything, that figure turned out low. Frank takes on a task few people would stomach: reading the enormous federal budget. In doing so, he teaches us less about the content, which has been widely reported, than the style and emphasis. Basically, the budget downplays the significance of our burgeoning deficits and prematurely raises the alarms about Social Security and Medicare. I've talked about my disdain for the current budget plan and the shoddy thinking behind it, so I'll present my relatively minor disagreements with the article.

First, Frank lets us know why he is so opposed to reducing or eliminating dividend taxes:

To receive...stock dividends...you don't even have to get out of bed in the morning. Dividends merely require that you have excess money lying around. This budget is the administration's way of showing for a population of unproductive freeloaders, as long as they're rich freeloaders.

I'll agree that people who have inherited large amounts of stock can just sit back and collect the checks, but lumping all major dividend holders overlooks the role of capital in capitalism. People take risks by providing capital to companies by buying stock, and are rewarded with a share of company profits. Why this is restricted to selfish freeloaders escapes me.

Second is the underlying assumption that all of this may come to pass because Republicans have no desire to help lower-income Americans. I am still willing to give some benefit of the doubt and blame a significant portion of the problem on the gullibility of certain leaders who have been giving their attention to economic kooks. After reading a little more of Frank's work, however, I think he would agree with me on this point as well.

In the end, though, Frank's substantive argument is correct: the current administration is steering the country away from ideas like social insurance and toward greater rewards to extreme wealth, especially inherited wealth. Continuing this trend in an era of increasing income inequality is the largest threat to a vital democracy in the United States.

2003-05-14T08:04:00.000-07:00

Dennis Kucinich Tilts at a Few Windmills

Dennis Kucinich has virtually no chance to win the Democratic Presidential nomination, and that's a good thing.

Sometimes I get frustrated when I hear someone on television puffing himself or herself up by criticizing a straw man (Ann Coulter popped into my head as an example, so I did a Google search. Result #1 was entitled "Kissing Cousins: New York Literati and Nazis".). I didn't realize until I heard an NPR interview this morning that Dennis Kucinich could do an admirable job filling in for the straw man. Let's look at some of his positions in a nutshell:

Health care: Abolish private insurance
Social Security reform: Lower the retirement age
Economy: Abolish NAFTA and the WTO and create a modern WPA

I agree with Kucinich's positions on some social issues, but I think that his platform is a shining example of one reason U.S. Representatives don't get elected President: they see that nation through too narrow a lens. For Kucinich, the main economic problem in the United States is a decline in manufacturing caused by NAFTA. For his Ohio district, there may be a grain of truth to this. For the nation at large, this belief is false and counterproductive.

The easiest shot one can take at Kucinich is that Cleveland went bankrupt when he was mayor. In the recent Democratic debate, Kucinich described this as a "badge of honor". If you're afraid that Kucinich's policies would bankrupt the nation, don't be. Apparently, we should be proud that Kucinich's policies would bankrupt the nation.

2003-05-13T19:12:00.000-07:00

How to Bet Final Jeopardy

In yesterday's Jeopardy! Tournament of Champions semifinal, Mark Brown and Brian Weikle entered Final Jeopardy! with $16,400 and $16,800, respectively. Mark, who I have met, had won six games, and should have known how to bet. Here's the deal: if you have more than 2/3 of your opponent's score, figure out how much he or she must bet to beat you by a dollar if you double your money. Then assume your opponent bets that much and misses. Bet enough so that if you miss, you beat your opponent by a dollar. Thus, Mark should have bet $15,600 (or less). Instead, he bet $16,299. When he and Brian both missed the final question, Mark lost. Had he bet correctly, he would have knocked off the highest scorer in Jeopardy! history.

2003-05-12T13:13:00.000-07:00

More Tax and Deficit Info

Surprise! The deficit projections got larger for the 14th consecutive time (disclaimer: that number is made up). Check it out here. And I doubt they're finished, since the agencies involved tend to use optimistic growth forecasts. In related news, the Senate's $350 cap on tax cuts is still not safe. And don't believe that number as it stands, between sunsetting, interest charges, and who knows what else, that number will be much higher in reality. Given the magnitude of the looming budget disaster, I'm keeping my fingers crossed for anything that will get a more responsible administration in power in January 2005. And I'm hoping it's something cheap and simple like a scandal, rather than low growth and the emergence of deflation, which will hurt everyone.

2003-05-09T07:33:00.000-07:00

Can Bad Hummers Still Be Enjoyable?

J.D. Power has released its initial quality survey for automobiles, and the most problematic car, by far is the Hummer H2. There is caveat: people still like the car overall, despite the problems. However, had I just paid $50,000 for a car that admittedly has lots of nice amenities, I'd be reluctant to criticize it regardless of what a pain it is. For more results click here. As AutoWeek and a few others point out, some people are complaining about gas mileage! Hummer is not required to report gas mileage, thanks to the perverse loopholes that keep dangerous SUVs on the road (please read this excellent article to understand the unwarranted dangers and inefficiencies of SUVs, and why we haven't gotten rid of them).

Given the H2's poor quality, I think the people who own this car must break down into a few categories:
I have so much money that there is little difference between an $50,000 car and an $5,000 car, and the H2 looks cool (10%)
I do serious off-roading (1%)
I am in the NBA, and everyone was calling my 2002 Escalade "old school" (0.1%)
I am overcompensating for something else (88.9%)

Follow-up: Today I was driving behind a Mercury Mountaineer on a freshly resurfaced road. Construction crews had left a gently sloping mound five or six inches tall and several feet in diameter. The Mountaineer nearly hit the curb trying to avoid it. I took it head on with my Mustang and barely felt a thing.

2003-05-07T12:40:00.000-07:00

Is Carlyle Evil?

I've just listened to two interviews from the NPR show Fresh Air. The first is with Dan Briody, author of The Iron Triangle: Inside the Secret World of the Carlyle Group. Mr. Briody is concerned with conflicts of interest that arise from Carlyle's inclusion of so many former government officials, notably George H.W. Bush. Mr. Briody calls this the "revolving door" between government and the defense industry, and Fresh Air host Terry Gross runs with the phrase.

Terry Gross then turns to (or, more accurately, turns against) Christopher Ullman, Carlyle's spokesman, who adequately deflects Terry Gross's criticisms of conflicts of interest and potential conflicts of interest. His job is made easier with his claim that Carlyle, formerly concentrated heavily on defense, now only has 6% of its assets in that sector. The simple answer to the question, "Is Carlyle Evil?" is, "It used to be pretty sketchy, but not nearly as much now." For a good summary of the changes Carlyle has experienced since its 1987 inception, see this Slate article.

This situation does speak to larger questions: "To what extent does the United States abide 'crony capitalism'?" and "Do we need more stringent laws and ethical guidelines to prevent conflicts of interest and corruption?" Unfortunately, I don't know the answers to these questions. I have a strong suspicion that much of what goes on in secret would not pass the sunshine test, and I am unnerved that the current Bush administration is, by most accounts, the most secretive in recent memory. At the very least, there is a tremendous gray area: something seems wrong about people using their public service records to gain influence and money, but influence is a fact of life in any enterprise, and requiring public servants to take a vow of poverty will surely shrink the government talent pool.

Any thoughts?

2003-05-04T18:53:00.000-07:00

Deficits and Interest Rates

I'm a big fan of William Gale and Peter Orszag at the Brookings Institution, which probably marks me as a wonk. Nevertheless, they are doing an excellent job of gathering economic research and bringing it to bear on current fiscal policy issues. Case in point: after making a strong case that expectations of deficits affect interest rates (explaining why it's hard to find a correlation with deficits themselves. Now, they quantify it. And, according to Brad DeLong, few serious economists are disagreeing.

The upshot: when deficits rise by 1% of GDP, long-term interest rates increase by 50 to 100 basis points. I consider myself a deficit hawk, but if pressed for a wild guess, I would have said that the effect was about 20 basis points. If this is true, it's astounding. Take whatever you thought were the costs to future generations of bad policy, and double them. That $350 billion cut doesn't seem so "itty-bitty" anymore.

2003-05-01T09:39:00.000-07:00

SARS

On last night's "South Park", a Native American casino owner deliberately gave South Park residents SARS, hoping that they would be too weak to resist construction of a 12-lane highway through their town. Randy Marsh, Stan's father, lay on his back, weakly telling his son, "Stan, there's only a 98% chance I'll survive. And soon, only 98% of us will still be here." I thought of this when I read this Slate piece. Duncan Watts makes the case for useful fear, but I feel he does too little to differentiate fear in places affected and unaffected by an epidemic.

Mr. Watts begins with the assertion that SARS doesn't justify its coverage, and sets out to undermine that argument by pointing out that fear of a disease can contain its spread. For residents of Hong Kong or Beijing, this is correct. But to see what is happening in New York, where no one has died from SARS and infected people have been identified and quarantined, read this New York Times article. It's madness, and it's unjustified.

Mr. Watts also mentions an Ebola outbreak in the Congo earlier this year, noting that it received little coverage. He might agree that there are two reasons for this, one of them good. First, ignoring Africa is challenging baseball as the national pastime. Second, Ebola epidemics tend to play themselves out very quickly, especially given the limited mobility of those who live in rural Congo. Likely none of these people was planning to get on a plane to New York.

Basically, people in North America should go about their lives, trust public health officials, feel bad that Asia is having to deal with this mess if they want, and not panic. Incidentally, the "middle-class cure" for SARS is revealed to Stan in a hallucination: Campbell's Chicken Noodle Soup, DayQuil, and Sprite.

2003-04-30T08:27:00.000-07:00

Chemical Weapons False Positives

I'm no expert on testing for the presence of chemical weapons. Just from some quick internet searching, I've found that there are a couple of reasons for all of the false positives coming from Iraq: pesticides and other substances can contain chemicals included in weapons, and tests err on the side of caution to protect soldiers. These seem legitimate to me, so I'm willing to be patient as new reports of suspected weapons come down the pipe.

Apparently, though, a test of some journalists' knowledge and judgement would produce false positives as well. Tales of trucks that look like mobile chemical weapons laboratories become twisted until most people just hear, "We've found chemical weapons, production facilities, and gas masks!" The responsibility for this situation should be shared between jounalists and the public that may believe too quickly. I continue to hope and expect that we will find chemical weapons in Iraq, but as each day passes, I wonder whether our intelligence agencies were duped by their own information. It is true that few people have lost money betting on Saddam Hussein's bad behavior, and that mistakes on our part could have been easily avoided with Iraq's honest accounting of weapons of mass destruction, though.

I guess the best summary for this convoluted post is that I'm conflicted.

2003-04-29T10:59:00.000-07:00

Another Quickie

It looks like some people are catching on to the fact that Krugman is exactly right about the President's tax plan: read this Washington Post article. Projected job creation is fleeting, and future generations pay a huge price for a one-to-two year effect at most.

2003-04-27T21:32:00.000-07:00

Required Reading

Please read Paul Krugman's addendum to his most recent column. It is a great illustration of the deceit behind the President's claims about his economic plan. If you didn't want to gag on the GOP party line before, maybe you will now.

2003-04-24T14:58:00.000-07:00

The World's Worst Crimes

I'm about halfway through Samantha Power's Pulitzer Prize-winning book, A Problem from Hell: America and the Age of Genocide. I've only reached Ms. Power's conclusions one a genocide-by-genocide basis, but it is becoming clear to me that a lack of information is always the first and highest hurdle before genocide prevention. When the extent of a group's genocidal aims become clear, it is usually to late to make a substantial impact.

There may be use for the UN Security Council yet; this seems like the optimal venue for creating groups that can quickly monitor areas of suspected genocide. Time after time our administrations have relied on fragmentary refugee accounts, and tried to discredit them anyway. Surely it is not an abnegation of sovereignty to allow "genocide inspectors" to verify the actions that a government has or has not taken. Additionally, as genocide is still a rare phenomenon, establishing such a unit should not imply a consistent or unwieldy commitment of resources. When I finish the book, I'll compare notes again.

2003-04-23T21:06:00.000-07:00

Obligatory Rick Santorum Column

In case you missed it, Pennsylvania Republican Senator Rick Santorum weighed in on the Supreme Court case Lawrence v. Texas, which will decide whether Congress may pass laws prohibiting consensual homosexual sex. Santorum said,

If the Supreme Court says that you have the right to consensual [gay] sex within your home, then you have the right to bigamy, you have the right to polygamy, you have the right to incest, you have the right to adultery.

I'll dismiss the simplest point first: adultery, while often grounds for divorce, is not illegal. Additionally, it is not victimless. For these two reasons, Mr. Santorum's comparison to adultery is spurious.

In subsequent remarks, Mr. Santorum has made it clear that he disapproves of homosexual acts, but paradoxically claims that he has no problem with homosexuality itself. This in itself seems tenuous to me and necessarily leads Mr. Santorum into some strange derivative views, but I'd like to focus on the legal aspect: what does this situation say about our ability to legislate sexual practices? Specifically, how can we ban polygamy and incest and remain intellectually consistent?

Incest is a tricky issue. For a Slate article about incest's role in this debate, click here. Some incestuous relationships no doubt include psychological coercion by an older person on a younger person and thus fall closer to the category of rape. But what happens if two first cousins meet for the first time in their twenties and fall in love? Well, it depends on the state. According to CousinCouples.com (yes, you read that correctly), over half of Americans live in states that allow first cousins to marry with no restrictions. I like the idea of requiring some genetic tests or counseling as a restriction on the practice, but it makes me wonder if Mr. Santorum is terrified of a dystopian future that actually is the status quo.

Polygamy is simpler in one respect: it is illegal in every state. Historically, American polygamy has had its problems, largely because its roots in Mormonism have made it easier for men to prey on young women (see an article here). I doubt that polygamy, even if legal, would catch on nationwide, but its prohibition has not prevented certain people in Utah from continuing the practice. Now we come to an unsettling question: why should secular polygamy be illegal? Be careful before heading down the path of "states have a compelling interest to preserve traditional family structures", because that path runs within sight of the "take children away from single parents" trail.

As "The Daily Show with Jon Stewart" pointed out tonight, maybe Mr. Santorum has a good point, but the opposite of what he intended. Maybe it's time to break down taboos against polygamy and incest in our nation. Wrapping my mind around the contradicting interwoven threads in the libertarianism cum moral authoritarianism traditionally practiced by Republicans is making me dizzy.

2003-04-22T21:48:00.000-07:00

Let's Go to Court!

This afternoon I stopped by the court hearing to determine whether former HealthSouth CEO Richard Scrushy can have his assets unfrozen. Mr. Scrushy's attorney Thomas Sjoblom called relatively low-level accountants to the stand in hopes that they would create doubt that accounting fraud happened at all. In the end, they did show that these accountants never recognized fraud. The SEC's lawyers, however, demonstrated that these accountants would probably not have been able to spot fraud if it was perpetrated at higher levels in the organization. I'm sure that the SEC will soon call several people to the stand who will explain how they kept their practices from their direct reports. We also found out that these low-level employees never saw Mr. Scrushy attend the private accounting meetings where the books were cooked. Well, I didn't see him attend those meetings either.

I don't know the standard of proof required here, but I thought Mr. Scrushy's team accomplished little, given an hour with each witness. I hope the rest of their case is this flimsy.

P.S. Court is boring.

2003-04-21T10:59:00.000-07:00

Dividend Taxes

The Bush administration is relenting a teensy bit on their drive to eliminate dividend taxes, prosposing a phase-in over the next several years. I'm not sure what the motive is this week. Is it to improve the stock market, which would only indirectly influence the growth of the economy, and years from now? Is it a giveaway to the rich? Yes, in part, but the article above says that the administration would consider delaying the drop in the top marginal rate to keep deficits down. Is it an ideologically driven revulsion to double taxation? Yes. Here we have a great example of the way ideology overlooks context and creates bad decisions. There may be a time for elimination of dividend taxes, but this is surely not the time. Additionally, the double taxation that affects most people comes in the form of sales taxes. I'm sure the family that pays income tax, payroll tax, and property tax and then pays 8-10% in sales tax on their groceries should see some relief as well.

Of course, this is extremely difficult because while the federal government taxes income and dividends, sales taxes are levied by states and localities. This is why there will be no charge to eliminate the double taxation that affects us every day. But this demonstrates that double taxation in itself is not evil. We must simply look at the level of taxation generated by different activities by people with different incomes, and decide whether the situation is fair. This is much more sensible than putting laser-like focus on dividend tax cuts amid our largest deficits ever.

2003-04-19T08:48:00.000-07:00

American Airlines Self-Destructs

Awarding contracts for Iraq's reconstruction isn't the only example this week of the way lacking transparency can leave a bad taste in one's mouth. AMR, the parent company of American Airlines, will likely go into bankruptcy because of undisclosed boosts in executive compensation amid calls for union wage concessions (CNN story here).

Under most circumstances, I am not a big fan of the way unions behave: will someone explain who wins when flight attendants can still take action to bankrupt the company after mechanics and pilots have already agreed to wage concessions? However, that is a topic for another post. In this case, I sympathize with the flight attendants, who recently found out that AMR executives had increased their pay (in ways unassailable by bankruptcy creditors) as an incentive to stick with the company through the rough year or three that would inevitably follow September 11.

Here's my minor point: this is hugely selfish. I also sympathize with an executive who realizes the magnitude of the problem ahead and fears that bankruptcy could wipe out his or her income suddenly and irrevocably. In that position, I too would look for ways to protect my future income from the company's creditors. Rather than shifting compensation to a safer place, though, AMR's top brass just created new compensation out of thin air. Some might say, "But without increased incentives to stay, smart people will leave" or "the risk/reward profile of their jobs significantly changed". The first is partly true, but disappointing. I would not look favorably on an AMR refugee who left simply because the challenge was great. As for the risk-reward profile, first, airlines employees know up front how cyclical and competitive their business is. Second, if it is possible to secure some compensation, why increase it at all? Risk has already been lowered.

Here's my major point: employees and the rest of the financial world need to know the terms of executive compensation. After bombshells about Dennis Kozlowski (who stole from Tyco) and Jack Welch (who did not steal from GE, but almost made out like a bandit anyway), have we learned and changed nothing? AMR has taught us that transparency is not only good for the financial community, but employees and a company itself. It should be illegal for executives to change their compensation without notifying anyone. Given the way the drive for corporate reform fell apart when the cameras turned off, I'm not optimistic.

2003-04-18T13:03:00.000-07:00

The Club for (Short-Term) Growth

Here's what I will concede to The Club for Growth: wanting lower taxes and lower spending at the same time is more responsible than the mainstream Congressional Republican position (lower taxes, but no spending cuts, or cuts mainly in services for the poor). But do we really need to compare Senators Voinovich and Snow to Jacques Chirac? The Club for Growth apparently does, in ads you can access here.

A good test of the staleness of an ideology is how it deals with slightly different viewpoints. In this case, Senators Voinovich and Snow worked to keep the size of the proposed tax cuts to $350 billion, about half of what the White House wanted. While hardly a repudiation of the call for lower taxes, this dissent has brought rare negative ads outside of an election cycle. Until someone at The Club for Growth takes the time to talk about the long-term effects of deficits, this campaign leaves me shaking my head and hardening my cynicism. I hate to be this way even before life has dealt me any major blows, but how can I help it when attitudes like this command such powerful followings?

More: Here's Eleanor Clift's take. By the way, have you ever noticed how the rational expectations arguments sometime used by the "deficits don't matter" crowd also largely preclude the idea of stimulus through tax cuts during a deficit? Talk about cognitive dissonance.

2003-04-17T16:22:00.000-07:00

The Halliburton Controversy

The cynic in me often says, "Republicans are for free markets, except when free markets might harm them in any way." I wouldn't mind that Halliburton, Vice President Cheney's former company (in which he no longer has a financial interest), had won a rebuilding contract in Iraq, if that contract had been put up for bids. For more details and a discussion on whether we can legally restrict these contracts to U.S. firms, see this Slate article. For those of you whose definition of "crony capitalism" simply involves mutual back-scratching, an expansion is in order.

I don't see a conspiracy that will enrich the Vice President or President, but more simply, letting people in the door because they are your friends, knowing that doing so may cost the taxpayers money. The President is lucky that news from the battlefield muted public attention to this issue. Here in Alabama, the incumbent governor lost in November, largely because of a few major no-bid contracts. Of course, the state voted heavily Republican in other statewide races. Hopefully, we will not forget this issue before November 2004.

2003-04-16T11:19:00.000-07:00

What I'm reading now.

Samantha Power, a lecturer at the Kennedy School of Government, has won a Pultizer Prize for her book, A Problem from Hell: America and the Age of Genocide. I've put it on hold at the local library, but in the meantime I'm reading an article she wrote for The Atlantic Monthly about what went wrong in Rwanda's 1994 genocide. Many people are arguing now that the U.N. Security Council is irrelevant, and they may be right. But this article demonstrates to me why we need to make strong commitments to the U.N.'s other functions in order to avoid future disasters.

2003-04-16T11:00:00.000-07:00

So You're Saying That Taxes are Improtant?

Here's an editorial from E.J. Dionne Jr. that ran in yesterday's Washington Post. It's pretty basic and uncontroversial; if you can't find any common ground with it, you've got problems.

2003-04-15T21:33:00.000-07:00

Propaganda in the War on Drugs

Once again, I saw an public service announcement in which we see a car crash test in reverse, ending with the image of two crash test dummies smoking marijuana. I tried to write down the voice-over correctly: "In a roadside study, 1 in 3 reckless drivers who were tested for drugs tested positive for marijuana. It's more harmful than we all thought."

There's an exercise in the GRE that requires the test taker to find logical flaws and gaps in a persuasive paragraph. Test takers would have a field day with this one. First, what kind of roadside study was this? It took place in Memphis is 1993, and a fair amount of information is here. Basically, we are not told how many people were pulled over, or how many were excluded because the cause of intoxication was deemed to be alcohol in the field. In fact, 28% of the subjects deemed not to be under the influence of alcohol actually were. Of course, we all know that THC can remain in the body for weeks after marijuana use, meaning that all, none, or some of these drivers were impaired because of marijuana. For a more detailed discussion of the study's limitations, click on the link above.

What if we did a study that got at the heart of the question: are high people bad drivers? Fortunately, the U.S. Department of Transportation has, and the results are here. There's a lot of interesting reading there, but this basically sums it up:

THC's effects on road-tracking after doses up to 300 g/kg never exceeded alcohol's at bacs of 0.08 g%; and, were in no way unusual compared to many medicinal drugs' (Robbe, 1994; Robbe and O'Hanlon, 1995; O'Hanlon et al., 1995). Yet, THC's effects differ qualitatively from many other drugs, especially alcohol. Evidence from the present and previous studies strongly suggests that alcohol encourages risky driving whereas THC encourages greater caution, at least in experiments. Another way THC seems to differ qualitatively from many other drugs is that the former's users seem better able to compensate for its adverse effects while driving under the influence.

If marijuana is less dangerous than alcohol on the roads, and used far less frequently, could we do more good by running ads against drunk driving? I have not seen many in the last few years.

The ad is doubly irritating to me because I helped pay for it. If you pay taxes, you did too. Next year, the National Youth Anti-Drug Media Campaign will spend $170 million, a tremendous amount of which will focus on marijuana. You can get more detail about the way we fight drugs and how much it costs at the National Drug Control Strategy budget. What kind of return are we getting on our investment? In a word, none. The latest National Youth Anti-Drug Media Campaign evaluation states the following:

There is little evidence of direct favorable Campaign effects on youth. There is no statistically significant decline in marijuana use to date, and some evidence for an increase in use from 2000 to 2001. Nor are there improvements in beliefs and attitudes about marijuana use between 2000 and the first half of 2002. Contrarily, there are some unfavorable trends in youth anti-marijuana
beliefs. Also there is no tendency for those reporting more exposure to Campaign messages to hold more desirable beliefs.

In short, "Marijuana use is up and attitudes aren't changing, even among those who watch our commercials." If you would like to suggest a better alternative use for $170 million, feel free to comment below.

2003-04-15T16:18:00.000-07:00

(Alternative Minimum) Tax Day

I almost forgot that today is tax day, having set a personal best by filing on April 10. In honor of this special day, I'll post an essay I wrote for my public policy school applications. The subject: the Alternative Minimum Tax, the biggest fiscal problem few people know about. My sources included reports by the Joint Economic Committee, GAO, National Taxpayer Advocate, Urban-Brookings, and an article in the Washington Post. The footnotes didn't come out in the HTML formatting.

The Alternative Minimum Tax Explosion: What Can Be Done?

The Alternative Minimum Tax, established over thirty years ago to prevent the very richest Americans from avoiding income tax liability, is poised to leave financial arcana and become the most prominent taxation issue in the nation. If left unchanged, within five years the AMT will make our income tax system more regressive and complex while tying the hands of fiscal policymakers. Unfortunately, there are no easy solutions. This essay will explain the source and magnitude of the AMT's problems and recommend a prudent solution.

Congress established the Alternative Minimum Tax in 1969 during a political firestorm following the discovery that 155 very wealthy people paid no federal income tax two years earlier. Essentially, the AMT severely restricted the types of deductions filers could claim, making it far more difficult to avoid taxes through complicated financial maneuvers. In its current form, the AMT requires many taxpayers to repeat their calculations to exclude several credits and deductions, deduct a standard exemption from their income, and determine a tax liability based on a different set of marginal rates. Filers then pay the higher of the two liabilities. In practice, this process is far more complicated than it sounds: the IRS estimates that taxpayers require twelve hours just to determine their AMT liability. As a result, preparation costs for AMT returns in 1998 were 9% of tax revenue, versus 1.6% for regular returns.

Complexity, however, is the least of the AMT's major problems. Because its exemption is not indexed to inflation, unlike conventional tax deductions, every year more filers find themselves subject to the AMT. The result is a tax, originally designed for the extremely wealthy, that continually loses progressiveness. Already, a family with six children and an annual income of $75,000 pays an AMT 39% greater than their regular tax, a figure that will grow for decades under current law. The reason for this bizarre outcome is that children cannot be claimed as deductions for AMT purposes.

Finally, the AMT will curtail Congress's ability to pursue fiscal policy goals. The Urban-Brookings Tax Policy Center estimates that the share of Adjusted Gross Income on AMT returns will leap from 9% to 56% in the next eight years. By that time, AMT repeal would cost about three times as much as regular income tax repeal. Thus, conventional income tax changes designed to provide stimulus or bring the budget into balance will have limited effect. This prospect has led several groups to propose methods for alleviating these problems.

The IRS, apparently more concerned with tax code complexity than the nation's fiscal health, advocates complete AMT repeal. Realizing that this would cost a tremendous amount, possibly $788 billion over the next ten years, they do acknowledge other options. For instance, common sense dictates that the AMT's exemption and bracket thresholds should grow with inflation. Additionally, it is hard to justify the AMT's lack of dependent exemptions; of the strategies the very wealthy use to reduce their tax burden, having children is not prominent. These two strategies together will lie at the core of any good solution, and could eliminate AMT liability for 83% of otherwise affected taxpayers in 2012, but would still cost about $500 billion in the next decade alone. There is only one reason that even these fair and simple reforms create gaping budget holes: last year's tax cut. As marginal rates fall, filers whose AMT liability exceeds their regular liability necessarily rise, making adjustments to the tax code increasingly useless.

The only meaningful way to offset the revenue losses from AMT reform is to reduce dramatically the size of the tax cut. Rate increases from proposed levels and a freeze on the estate tax phase-out will improve fiscal balance and free many taxpayers from the complexity of the AMT. Unfortunately, the wind is currently blowing the other way in Washington, with talk of new, accelerated, and permanent cuts for the richest taxpayers. In fact, the Council of Economic Advisers may include in its annual report analysis purporting to show that the poor should be paying more federal taxes. At most, one can reasonably hope is that regressive, deficit spending proposals will not pass during a climate of increasing deficits. Before taxpayers make the AMT a top concern around 2005, then, those committed to fiscal responsibility should work to convince lawmakers that income tax freezes or increases are part and parcel of any responsible and meaningful solution.

In short, we have allowed a tax originally designed for a few dozen people to threaten multiple aspects of fiscal policy over the next few years. Without a commitment to prudent reform, Congress may make hasty decisions, such as reducing the AMT's marginal rates, this will make the income tax system less progressive, cause larger deficits, and do nothing to solve the AMT's structural problems.

2003-04-15T11:15:00.000-07:00

Putting a Price on Life

This morning, I read an editorial that pointed out that fewer Americans have died in the Iraq war than on Florida highways since the first of the year. I started to free-associate a little (what if we knew that Saddam would step down peacefully if Florida drivers agreed not to use highways for four months?), and remembered the results of a Harvard Center for Risk Analysis study (news article here) that determined the costs of cell-phone related traffic deaths and injuries are about the same as the value we place on cell phone use. Of course, this study would have been impossible without picking out a number for the value of a human life.

When this study came out, I remember that the folks at Car Talk were pretty miffed at that idea. I was stunned, not only because I respect the intelligence of the MIT-educated Magliozzi brothers, but because they put a value on life every day. If you invite someone over to your house, you weigh the benefit of company against the risk he or she will die on the way. Not only do we allow restaurants with mediocre but not terrible food safety records to stay open, we eat there.

There are a couple of enormous problems with this line of thought, though. The first is our ability to estimate risks. When the Harvard study mentioned above estimated the savings to society of a car cell phone ban to be $43 billion, it actually found a range of $9 billion to $193 billion. Thus the most authoritative study on the subject is not sure if it is off by a factor of four. Imagine, then, trying to estimate the chances of dying that the same person you invited faces. I doubt skydiver could pin down his or her risk of dying on the next jump within a factor of ten.

The other enormous problem is the distribution of risk. The $43 billion of value from having cell phones in cars and the $43 billion of harm that they cause does not always accrue to the same people. Our willingness to tolerate this is tricky: at what point do we decide that benefit and detriment are exclusive enough to intervene? I'm afraid I don't have the answers, but this is just one part of life that becomes a little more comprehensible when viewed through the lens of economics.

2003-04-14T10:32:00.000-07:00

Syria on the Hot Seat

I was always skeptical of the argument against war in Iraq that alleged Iraq would be the first of several wars against Syria, Iran, North Korea, and France. Okay, maybe not France. Reasonably enough, I assumed that step two of the drive towards a safer world was clearing up the Israel/Palestine problem. In fact, we had been promised a "road map" to peace in the area. As this piece in The Guardian shows, we're still waiting. While part of me hopes that President Bush is waiting until we have stockpiled enough sunglasses so we are not blinded by the plan's sheer brilliance, I am becoming more resigned to the fact that this administration doesn't have the wherewithal to make a serious effort at a real solution. I'm sure the failure to this point involves our attitude towards the region, our will to confront Israel, and the way Ariel Sharon and Yassir Arafat have been behaving over the last few years. I don't consider myself knowledgeable enough to assign relative shares of blame, though.

So instead we get this threatening stance toward Syria. I see two distinct issues here: is Syria covertly assisting Saddam Hussein's regime, and what role are they playing in terrorism? To me, the first is dubious. Even if I were running a country that does not like the United States, what would I possibly gain by giving safe haven to Saddam at this point? Terrorism is a stickier issue, and I think we have every right to talk about what Syria has done in the past, and pressure them to abandon Hezbollah. But this is why I wish I knew the administration's disposition: are we blustering now because it's an excellent time to scare Syria straight, or are we seriously considering an attack?

My reasons for supporting war in Iraq were always more similar to those of Tony Blair than of George Bush: as a condition of the end of the Gulf War, Iraq said itwould no longer possess biological or chemical weapons. Twelve years later, they had not made serious attempts to keep up their end of the bargain. That was a solid foundation on which to add issues of human rights and potential terrorism. In short, we gave Iraq fair warning. Now it is time to give Syria fair warning. Doing so is a complicated process, though. Supporting terrorist organizations is wrong, and provides the easiest demands we can make. However, I cannot find anything unlawful about Syria's potential possession of chemical and biological weapons. We will have to create new international rules, potentially affecting ourselves, before we can use this as a reason to take any action against Syria. Right now is the time to get to the negotiating table (by the way, can we put someone across the table from Kim Jong Il before he finishes building his first nuclear weapon? This situation is creeping me out.). But when we get there, we have to be reasonable: let Syria know what we consider acceptable behavior, and lay out means for measuring compliance and penalties for non-compliance. And we have to be crystal clear about it: lack of clarity made the steps to war this year look like a fiasco.

Update:The Guardian is reporting that the White House has ruled out an attack. I hope they're right.

2003-04-12T16:04:00.000-07:00

Charities I Won't Support

I like golf.

I like to watch it, and I like to play once in a while, even though I'm not skilled. The Masters this year is free of advertisements, so I guess that makes the spots for The First Tee public service announcements. The First Tee is an organization, sponsored by the World Golf Foundation and several other groups including the PGA, with the following mission:

To impact the lives of young people around the world by creating affordable and accessible golf facilities primarily to serve those who have not previously had exposure to the game and its positive values.

Let's ignore for the moment that only two of The First Tee's 117 facilities are located outside the United States, making "around the world" a little dubious. More importantly, I believe there are less expensive and more enduring ways to teach values (and physical fitness) to kids than giving them buckets of balls and an occasional tee time.

For this reason, I roll my eyes whenever these spots come on TV. However, I know that the opportunity costs here are very low. If the first tee did not exist, those in charge of community relations at the PGA et al. would look for another way to use their money to teach golf to kids. In short, shutting down The First Tee would not create mentoring programs or midnight basketball leagues. So I will continue to roll my eyes, despite knowing that The First Tee is much better than nothing.

2003-04-12T13:07:00.000-07:00

We'll Take It as a Compliment

Here is a CNN story from the meeting among Vladimir Putin, Jacques Chirac, and Gerhard Schroeder (does this group have a catchy name, like "The Coalition of the Trying to Save Face"?). Mr. Putin is happy that Saddam is gone, but he's quick to point out that the goal of disarming Saddam hasn't been achieved, and thus the war failed in its main objective. As he said,

Nothing was found, and even at the last moment of their struggle for survival, the Iraqi regime did not use it. They either don't have them, or they are in such condition that they could not be used. And this raises the advisability of such an action. What does this mean? What was the war for?

Let me see if I have this right: the countries that were proposing last-ditch inspections that could last for months have now decided that a week of U.S. searches with few results proves that Iraqi chemical weapons don't exist.

Surely Mr. Putin knew that his comments could be proven (more) idiotic at a moment's notice with a major find. In fact, we may have achieved just that in the last 24 hours. If we do find these weapons now, does that mean that the war was completely justified? Maybe Mr. Putin would like to supervise the drafting of a retroactive UN resolution. In the meantime, I feel flattered that Mr. Putin's opinion of the U.S. is so high that liberating 80% of a country, overthrowing a tyrant, and doing so in three weeks while keeping an eye out for WMD just isn't fast enough.

2003-04-11T14:09:00.000-07:00

More Red and Blue State Data

Garrett Moritz has cited a Business Software Alliance study here that shows relatively high rates of piracy in states that voted for George Bush in 2000. For more analysis on this particular nugget, go to Garrett's post. Faithful (and probably cynical) readers of Paul Krugman wouldn't be surprised. See Professor Krugman's columns here and, more importantly, here for an explosion of commons myths about the self-reliance and morality of the so-called "Red States". I'm surprised that this idea hasn't gained more currency among journalists.

2003-04-11T12:23:00.000-07:00

New Link

Even though I take a tough line against deficits, linking to the Concord Coalition slipped my mind. Now it's on the list. I do wonder sometimes, structural deficits are undoubtedly bad, but is the Concord Coalition too hard on deficits that accompany business cycles? Today, that's like asking whether the National Weather Service would make such accurate predictions if the sky were green: our deficits have been structural since the '80s, and will continue to be for some time. Why worry about hypotheticals?

2003-04-11T12:00:00.000-07:00

What I'm Reading

I'm about 1/4 of the way through Global Political Economy by Princeton Professor Emeritus Robert Gilpin. In the end, I think it will be a useful introduction to the themes I'll be studying soon, but I find Professor Gilpin spending too much time being thorough about conceptual foundations at the expense of applying concepts to the beginning of the 21st century. For instance, you'll find the idea, "Economics is more rigorous and abstract than International Political Economy, at the risk of oversimplifying" covering at least ten pages in various permutations. Look for a reference to the nation of India anywhere in this 402-page book, though, and you're out of luck. After reading this, I think I will feel more at ease in a faculty lunch than the real world.

Update: My critique is still true but mostly useless (it is still too repetitive): Professor Gilpin addressed the state of the world in The Challenge of Global Capitalism: The World Economy in the 21st Century.

2003-04-11T10:45:00.000-07:00

Martha Burk

I was about to write about Martha Burk's activities as half admirable and half boneheaded. After reading this article, though, I'm willing to give her the benefit of the doubt and call it 75/25. Deep down inside, she must know that she's not exactly fighting for Rosa Parks. If she succeeds completely, an extremely wealthy woman will be afforded slightly more privelege than she was before. More importantly for the women's movement, Ms. Burks has guided the National Council of Women's Organizations to a more prominent place in the discourse on women's rights.

This was to be the part of the post where I wrote, "So what does she do with her bully pulpit? She messes with the WNBA, the economics of which she obviously has no grip on." That is still true, but I should say first that the Atlanta Journal-Constitution article cited above shows that Ms. Burk is not just a two-issue woman. To a great extent, the media has focused on her to the extent she has attacked sports institutions, and turned off the microphones when Estonian pornography comes up. This is not her fault.

But back to the WNBA. Ms. Burk thinks its players are underpaid, and wants to help in the collective bargaining process. Here is a summary of the situation and Ms. Burk's role as it stood in February. This update shows that the NBA has committed an additional $12 million to an organization that has never turned a profit. I see the NBA realizing that the WNBA will not be profitable for some time, if ever. Nevertheless, they still feel strongly enough about the issue to pour money into unprofitable women's basketball to create opportunities for women. For some reason, this upsets Martha Burk:

We know the dollars cannot be equal, but 15 percent of revenue for the women as opposed to 60 for the men is way, way out of whack. They could do some structural changes over time that would greatly improve the situation of the women without breaking the league.

Without breaking the league? If the WNBA were an independent organization, it would have ceased to exist after its first or second season.

This speaks to my larger problem with people who would destroy markets in order to save the people they serve. Does Ms. Burk really think that she will accomplish something by sitting down at the bargaining table and saying, "This unprofitable league needs to quadruple player salaries"? If I were the players' union, I would stay as far away from Ms. Burk as possible. She would destroy the WNBA, and the opportunities it creates, just to make a point.

2003-04-09T22:18:00.000-07:00

New and Improved

There have been no visitors to the Yahoo! discussion group I set up, and I'm not surprised. It seems like a real pain to go all the way over there and jump through hoops just to make a point. Luckily, I've found commenting software from SquawkBox that allows anyone to post a comment right on my page. Just look for the comments link below the post you're reading.

2003-04-09T09:42:00.000-07:00

The Tasty

I was feeling a little smug last night after tearing up my rent control strawman (see below), until I remembered the Tasty. Until 1998, the Tasty was a greasy little diner in the heart of Harvard Square. The emloyees were authentic Boston characters, and I think it's safe to say that most people were sad to see it closed to make room for an Abercrombie & Fitch. This is not exactly a rent control issue, but gets at the ability of a property owner to do and charge what he or she wants. I began to ask, amid fits of nostalgia, whether the closing of the Tasty was economically efficient.

In the 18 months that I lived close to the Tasty, I ate there just once. However, I felt good the whole time knowing it was there; economically speaking, the Tasty gave me more utility than Abercrombie, regardless of my eating habits. I see six parties that had a stake in the situation:

1. The Tasty, which did not want to be closed.
2. Abercrombie & Fitch, which wanted to open a Harvard Square location.
3. Cambridge Savings Bank, which owned the building and wanted to install a more profitable store.
4. People in the area who preferred the presence of the Tasty.
5. People in the area who preferred the presence of Abercrombie & Fitch.
6. Owners of other Harvard Square stores who depend on foot traffic in the area.

Obviously, 6 depends on the relative strength of 4 and 5. Then, closing the Tasty provided the greatest utility if 2, 3, 5, and possibly 6 outweighed 1, 4, and possibly 6. In my gut, I believe this was the case. However, there is a problem if it weren't. 1, 2, and 3 no doubt spent the most time working through and influencing this decision. The interests of 4, 5, and 6 are much harder to aggregate. What recourse would you have when yours is the dominant view, but demonstrating that is like herding cats?

Of course, you can agitate in general and threaten boycotts. This is the preferred strategy of Tom Magliozzi of Car Talk, who put up a site urging others to do the same. Fortunately for Mr. Magliozzi's cause, he had a ready-made audience and popular website. Unfortunately, he didn't win.

I see an analogy between this and public company governance. People who own 0.0001% of a public company have an incentive to lobby for good governance and smart decisions, but most of the benefit of any action they take will go to others. The same holds for the Tasty. Why would I spend substantial time to give myself a tiny increase in utility, even if thousands of other people will receive the same.

There are situations more dire than priveleged kids preferring greasy food to upscale cothing; it is no coincidence that garbage dumps are built in poor neighborhoods. In this situation, my earlier list is similar. However, the people who prefer not to have a dump near their houses have less to lose (in property value) and fewer resources with which to fight. For this reason, it is easier for those who want to locate their dump to win the battle.

If you have memories of the Tasty or anything to add to the discussion, post here.

2003-04-08T19:35:00.000-07:00

Rent Control

There's a healthy discussion happening at Brad DeLong's site about rent control. The starting point is an anecdote about Robert Nozick, a libertarian philospher, agressively finding refuge in non-libertarian regulations. There are a few arguments being made for benefits of rent controls, but they are a hard sell, given the lack of controversy among economists that rent control is generally inefficient. The one that irks me runs along the lines of "There were all these interesting, diverse people in Cambridge during rent control, and now it's just boring rich people and high rents."

Now, I like to hang out in Bohemian neighborhoods as much as anyone. But these fanstastic residents got their apartments by luck or historical accident, and got low rents on poorly maintained apartments in return. That there were so many more interesting people that had to live far away from their work/friends/etc. is apparently unimportant. I believe Americans have the right to live in safe housing, but not wherever they want. We can allocate scarce resources (living in a popular area) with market prices. Previously, the benefits to the lucky few were far smaller than the inefficiencies and the penalties effectively paid by the rest.

2003-04-08T10:48:00.000-07:00

Good News Brings a New Link

The NCAA Basketball Championship is over. Syracuse did a great job, and Roy Williams swore on live television. I'm replacing my link to the basketball scoreboard with the Major League Baseball scoreboard. Since I will be studying at the Kennedy School of Government next year, it's time to get back in touch with the Red Sox.

2003-04-07T20:41:00.000-07:00

Finally, a Forum

I've established a discussion group at Yahoo! so that I don't have to keep throwing things into space and wondering if they get read. Visit at http://groups.yahoo.com/group/hcq/. Stop by and share your opinions. Update: I have just simplified the process slightly by allowing anyone to post to the discussion. You need not sign up as a member.

2003-04-07T15:19:00.000-07:00

A Truly Bizarre Commercial

To follow my longest post so far, I'd like to make a non sequitur and point out how strange the commercial for Colgate Herbal White is. It's hard to describe, but everyone is so unnaturally happy in the commercial, including the talking beaver who apparently brushes his teeth. It just doesn't look like a commercial aimed at Americans, which makes it like Mentos commercials, but not in a cool Euro-camp way.

2003-04-07T14:36:00.000-07:00

The News for Supply-Siders Is Great...I Mean Horrible

If you feel like you need more confusion in your life, this might help. Recently, the Congressional Budget Office took a stab at dynamic scoring, or estimating macroeconomic effects from the President's proposed budget that might alter deficits. I don't deny that changes to fiscal policy have some effect on the economy, but the results of the CBO's work demonstrate just how hard it is to calculate these effects, much less to create budgets based on them.

If you've got a strong stomach, start with the CBO's paper here, and find "Budgetary Savings" about 3/5 down the page. The simplest and least ideologically loaded way to summarize what follows is that different models provide very different results, and that the outcome is very sensitive to the direction fiscal poicy takes after the year 2013. I doubt many people would disagree with that statement.

What do people with strong views on the left and right have to say? Let's start with the National Center for Policy Analysis, which is officially non-partisan, but generally wants the government to be as hands-off as possible. Bruce Bartlett writes here that the CBO has a long way to go, but to the extent that some of the models used supply-side economics we find that up to 33% of revenue losses will be recouped by supply-side incentives. The models that said otherwise are "primitive".

Now let's turn 180 degrees to New Democrats Online (NDOL), who claim here that supply-side economics effectively ended this month. Amid gloating, they hammer one point home with the help of the Wall Street Journal: no models claim that the new tax cuts would come close to paying for themselves entirely. True, but hardly enough to make the President and conservative think tanks strike their tents and shun tax cuts, which the NDOL admit.

So who's right? Well, neither. By selecting parts of just one of nine models and declaring the others bunk with a wave of the hand, Mr. Bartlett has built a shoddy case for the preliminary victory of the supply-siders. In turn, the NDOL needs to get over this and move more subtle arguments that we are being asked to buy, e.g. deficits don't really matter. Not all supply-siders believe that tax cuts pay for themselves completely, and they are still firmly in charge of fiscal policy.

I believe that tax cuts without spending cuts, in the face of a current account deficit, will reduce tax revenue in all years. Crowding out of private investment will reduce national income growth, leaving us worse off in decades to come. This is textbook macroeconomics. The "decades to come" are not in any of the CBO's models. In fact, the model Mr. Bartlett prefers was considered too unreliable for a ten-year projection. In a way, this is like buying a television on a credit card, looking at a 12-month budget, and determining that you are better off because you will only be paying the minimum balance for the first year. The greatest benefit comes at firsts, while the costs follow forever. However, paying the minimum on a credit will eventually get you out of debt. Running structural deficits never will.

2003-04-06T10:46:00.000-07:00

Deficits and Debt

The federal deficit is a hot-button issue for me. The latest I've read about the future of the budget is a New York Times piece here. You might have to register to read it, but what are you waiting for? Everyone should register to read the Times free online. It's a good article as a basic explanation, without giving undue weight to supply-side claims that are pure fantasy. I can find ten articles just like it, though, and they're all true. If you're in my generation (I'm 25), you are getting the short end of the stick economically. We will probably pay, for our entire working lives, for tax cuts and benefits to older generations that will have been great for them but have done little or nothing to improve long-term growth.

What to do about it? Well, there's not much to do. Our generation will have to wait 20 years or so for substantial legislative power. When we have it, we can either take our lumps and curse the shoddy economic policies of the first years of the 2000s, or we can "pay it forward" and stick it to our children in turn. I won't make any predictions, since no one knows what choices future administrations will make about taxes and spending. But there's no cause for optimism yet.

2003-04-05T17:56:00.000-08:00

Looking for War Info?

Brad DeLong has posted a list of his favorite sites with war news. It includes these:
Flit
The Agonist
The Command Post
Strategy Page
Phil Carter, Intel Dump
Defense Tech
Casus Belli
CDI Eye on Iraq

I honestly don't check them that often. Here's how I'm approaching the war:
1. We're going to win.
2. Exciting/tragic things will happen.

Up to the minute news can be interesting in the same way a sports match is interesting, but I'm going to save most of my time for sources that can put together the news with more than 24 hours of perspective. I don't mean that the authors of these sites don't possess perspective, but I lack the experience or knowledge to read minute-by-minute reports and understand what is important.

2003-04-04T21:05:00.000-08:00

Michael Kelly, Part 2

As a dilletante in the world of journalism, I obviously lack some perspective on Michael Kelly's real contributions. I was only familiar with him through his work as columnist for the Washington Post. There will be not shortage of eulogies, but here is one from Slate, which gives only one unflattering paragraph to Mr. Kelly's work with the Post. There is definitely much more to the story.

2003-04-04T10:44:00.000-08:00

Michael Kelly

Not long ago I wrote a letter to the editor of my local newspaper, incredulous that they paid good money for a Michael Kelly column that was nothing but a long Ari Fleischer quote, with no original thought. Still, my heart goes out to his family and friends.

2003-04-01T22:18:00.000-08:00

Michigan Works for Diversity, but not Hard

I believe that there are good solutions to the University of Michigan's affirmative action problems, but they might take some effort. The university should put all of its applicants through a rough screen and determine who would be admitted under any circumstances, who would be admitted under no circumstances, and tackle the rest on a case-by-case basis. This system, which I did not invent, makes so much sense. Admissions officers could take a holistic view of the background and experiences of borderline candidates, making the crucial distinction between people who have overcome challenges and those who happen to have certain characteristics.

Add a few dollars to the application fee, and hire enough people to make it happen. The result will be a pool that is diverse in a more meaningful sense of the word, and a fairer process. In fact, don't raise the application fee. Just take the money saved by not hiring lawyers to argue cases through the entire federal appellate system.

2003-03-28T16:42:00.000-08:00

Belated Oscar Thought

Several people noticed that Martin Scorsese showed admirable magnanimity with his standing ovation when Roman Polanski won the Academy Award for Best Director. For me, this raised the question, what is the appropriate way to honor a rapist who refuses to face the consequences of his actions, but still produces great art? Had I been present, I think I would have responded with subdued applause, but I'm still not sure why that is qualitatively different from an ovation. However, I think anyone who wants to give an ovation should read Samantha Gailey's grand jury testimony here. It is a detailed account of how Mr. Polanski got Samantha drunk, gave her a quaalude, and raped her. Desipte being drunk and drugged, she was telling him to stop throughout the ordeal.

By the way, since when am I writing Bill O'Reilly-style columns?

2003-03-28T01:34:00.000-08:00

91% of Statistics Are Wrong

The Spanish newspaper "El Mundo" currently has a story with the headline, "Cerca del 91% de los españoles es contrario a la intervención en Irak", or "About 91% of Spaniards are against the intervention in Iraq" (please let me show off; I spent a whole month learning this language). However, the real question asked was, "How do you evaluate the position of the Spanish government on the Iraq crisis?" Here's how they responded:
Muy mal: 27.3%
Mal: 32.5%
Regular: 22.5%
Bien: 9.7%
Muy bien: 1.2%
N.S/N.C. (Don't know): 6.8%

Maybe there was a different question that didn't merit its own pie chart, but I find it hard to believe that of the 40.2% that don't have an unfavorable opinion of the government's position, only 9% are not against the war. I don't know if this type of flub is common in the Spanish press, or if there's something about this strightforward story that I simply missed. But it does bring to mind two questions:
1. Do we realize that the proportion of people in Spain who aren't angry about their government's participation is closer to 40% than 9%? (Probably not)
2. Do we care? (Probably not)

2003-03-25T13:20:00.000-08:00

Inauspicious

If I had known that everyone with a soapbox would write about the difference between Adrien Brody's speech and Michael Moore's, I might have written a little more or dropped the idea entirely. It was the main joke in the first segment of the Daily Show, for crying out loud. Two posts pulled from Slate's Fray are here and here.

I'd like to be more original, but posts about the need for Alternative Minimum Tax reform, which is the biggest fiscal time bomb of the next five years, don't seem all that important right now.

2003-03-24T10:18:00.000-08:00

Michael Moore Is This Close to Being Relevant

Among last night's parade of Oscar speeches that mentioned the war in Iraq, two stood out. First, Michael Moore:

We live in the time where we have fictitious election results that elect a fictitious president. We live in a time where we have a man who's sending us to war for fictitious reasons, whether it's the fiction of duct tape or the fiction of orange alerts. We are against this war, Mr. Bush. Shame on you, Mr. Bush. Shame on you.

Later, Adrien Brody:

My experiences of making this film made me very aware of the sadness and the dehumanization of people at times of war ... Whatever you believe in, if it's God or Allah, may he watch over you and let's pray for a peaceful and swift resolution.

At the risk of being presumptuous, I believe that Mr. Moore has spent more time than Mr. Brody learning about the seamy aspects of American social, political, and corporate culture. This is not to put down Mr. Brody, whose speech was eloquent, heartfelt, and appropriate. On the contrary, Mr. Moore hid his knowledge, understanding, and wit behind a tirade suited more to a street corner than national television. It was no mean feat for Mr. Moore to be booed from the stage by a group that was honoring him with its highest award.

Mr. Moore could become one of the most influential filmmakers and authors of our time if he could find the self-restraint to avoid bullying people on camera. A short speech about any one of the atrocious disasters cited in "Bowling for Columbine" would have been infinitely more useful than his rabid cliches.

Counterargument: Ann Coulter made the New York Times Bestseller List with 240 pages of screaming nonsense and dishonesty. Maybe the message is more important than the messenger.