Thursday, December 19, 2013

Hey Pope, Ever Think of Taking an Econ Course? Just Sayin.

What’d I tell you not two blogs ago? That growing income inequality will become increasingly the focus of the political dialogue, at the behest of those never satisfied with current large levels of income redistribution. And within a month, we have first Pope Francis railing against the income inequality supposedly created by an unfettered free market economy, and secondly Obama. Because as a Catholic I take Pope Francis seriously, and in contrast Obama has proven his utter lack of credibility on most any issue, I want to address Pope Francis’ comments here.

Wilhelm Ropke was a German economist who was tasked with re-making the West German economy in the aftermath of World War II. In his day, he was a very powerful advocate of the free market economy, and additionally he was a devout Catholic. Presumably his economic beliefs would be out of favor with Pope Francis, given the Pope’s current views, but there is a quote from Ropke that captures perfectly the sentiment I had, as a Catholic advocate of free markets, in reading the Popes comments:

…we need a combination of supreme moral sensitivity and economic knowledge. Economically ignorant moralism is as objectionable as morally callous economism.

In parts, the Pope’s comments are objections to morally callous economism, but much of it is economically ignorant moralism. The Pope has the supreme moral sensitivity, but in my humble opinion he clearly lacks the economic knowledge. As a result of this ignorance, he argues for those things that will tend to more fully entrench the morally callous economism he rightly opposes.

Consider this sentence from Pope Francis:

Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless.

What economy does this describe? If these comments were addressing political competition for the reigns of very powerful centralized government (i.e. the entire developed world), rather than competition within free markets, they would be far more accurate. The “laws” of competition and the survival of the fittest are terms used to describe competition among firms – that is, competition among entities started with capital supplied by an entrepreneur – so in the current framework, we are discussing competition among those the reflexive anti-market left regards as powerful. The competition refers to two bears going at it, not a bear fighting a bunny.

The evolutionary analogy to survival of the fittest is wrong in so far as it evokes the zero-sum competition between two animals for a fixed food supply; two competing firms compete to serve a common set of customers, and the one that serves the customers more fully is going to be more successful. You don’t win by force of might, you win by serving others – this is a fairly important distinction to be made when the subject is an economy that serves human need. Companies operating within a free market economy have no powers to compel anyone to purchase anything. The extent of their power over their customers is limited to the extent that they can offer a comparatively better product and a more attractive price. Railing against such competition is equivalent to railing against service to those the firm is trying to serve; surely the Pope does not mean to bemoan a system that puts the less efficient producer out of business. If so, he would be advocating for the rich and powerful entrepreneur over the “powerless” consumer.

Consider the company that takes more of your money than any other – is this a case of you as lamb being eaten by the lion? I pay untold amounts in mortgage interest each year, but nothing compelled me to enter into such mortgage loans, and indeed I was quite happy to get the money. Banks would seemingly fit everyone’s definition of the powerful eating the powerless, but the housing crisis consisted primarily of the powerless defaulting on their debt obligations to the banks and then carrying on with their lives none the worse for the wear; where are banks that have set up the private debtor’s prisons for the powerless who crossed them?

A successful corporation, in isolation from the state, has little power under any understanding of that word. The largest and most powerful of companies employs a miniscule fraction of the workforce, and must offer them opportunities that are more favorable to them than the millions of other potential employers. The same company has sales that are a miniscule percentage of GDP, and has no ability to compel you to purchase their products. To the extent that they make extensive profits, their re-investment decisions have a small impact on the course of the economy, but so what? They do not finance such investments out of compulsory payments from workers or customers.

Pope Francis’ antidote to a misplaced concern over a system of competition that empowers those he views as powerless is to turn to the state:

In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.

The first sentence can probably be refuted with a thousand facts, the simplest of which is to recognize that nearly every measure of health and well-being increases with national income, and that in general those economies that are characterized by more economic freedom tend to be richer. One of the largest problems among the impoverished or marginalized people within the U.S. economy is obesity! But even the United States, certainly one of the richest countries, can hardly be characterized as an unregulated free market economy. It has a highly progressive income tax system, vast social welfare income redistribution programs, a system of compulsory and tuition-free primary and secondary education, and enough regulations to make every attorney in America living high on the hog. What Chesterton said of Christianity can be said for free market economics – the problem is not that it has been tried and found wanting, the problem is that it has not been tried.

The use of the term “trickle-down” is a gratuitous prejorative of the left to decry market economies. I need not naively or otherwise “trust” the goodness of those wielding economic power in a free market system, because no single person or firm wields any discernible economic power in a free market system. With respect to my own life within such an economy, I wield that power – I am free to make decisions as to work, savings, and spending.

In economic markets, it is the firm that is relatively powerless, and the consumer that holds the power – he can vote with his feet every day. In political markets, elected officials wield far more power than voters, who have much less freedom to vote with their feet, and otherwise have infrequent opportunities to vote otherwise. It is politics that determines the dividing line between the economics sphere and the political sphere – if it determines there is no dividing line, as in say the Soviet Union, all of the power to vote with your feet – the power held by the lowliest of the low in free markets – is subsumed within the state.

It is only as the economic sphere is increasingly determined by the political sphere that economic power becomes concentrated, but it becomes concentrated via government. To take the very relevant recent example of Obamacare, a health insurance company cannot compel me to purchase health insurance in a system founded upon economic liberty; it is only with the power of the state, in a setting where economic liberty is not valued, where it becomes a law that I must purchase health insurance or otherwise face a penalty. Insurance companies do not make and enforce laws – they provide a private good. Governments make laws, and once they decide they are free to make laws regarding the purchase or supply of private goods, it is only then that we need to worry about naively trusting the goodness of those wielding economic power, because it is only then that such power becomes concentrated and meaningful.

The power to compel – a power reserved exclusively to the state – is the power that we should be concerned with. In an unregulated free market economy, no company possesses that power. But once we take our successful corporation out of the hypothetical world of free markets, and put them into an economy where the state plays a vigorous and active economic role, it should not surprise us that such companies will attempt to achieve through the unique power of government what it cannot achieve on its own – namely, the restraint of competition for the purpose of self-enrichment. It is not just companies that do this – labor unions do it as well – and in both cases it involuntarily diminishes the power of consumers, who would otherwise collectively wield the relevant economic power through their voluntary actions.

Pope Francis’ cursory dismissal of free market economies leads logically to his advocacy of the very concentration of economic power, in the hands of the state, which brings about much of the misery he seeks to curtail:

While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control.

This quote reflects a cognitive affliction of the left with respect to economics, best referred to as “Fixed Pieism.” If the economic pie were fixed, a system bent on cutting all of the slices evenly would achieve that goal quite easily. But the pie has hundreds of millions of potential bakers, and if you tell them all in advance that they will get an even slice regardless of their input, you will get a much smaller pie. In light of this, it is shocking that after the collapse of communism someone can make the claim that growing income inequality is the result of ideologies that defend free market principles? In the aftermath of the collapse of the Soviet Union, when we no longer needed to trust the propaganda of the Soviet Union with respect to their claims of economic growth and income equality, it became evident that it had neither – in a system of government and economics whose very premise was the eradication of inequality, the degree of income inequality was worse than it was in the United States. Beyond that, its lack of growth meant that if you were unfortunate enough to be at the poor end of the spectrum, you were likely worse off, and certainly no better off, than the poorest in the United States.

Who is it, then, that is placing naïve trust in the goodness of those wielding economic power? Is it me, who advocates a system that essentially removes all such power, or is it the Pope who wants to in effect create such power by placing it in the hands of the state, which he regards as “charged with the vigilance of the common good.” It may be so charged, but the understanding of the term “common good” varies across and within countries. In Iran, there may be universal agreement that the common good would have the Pope submit to Islam or be beheaded. One would hope that their vigilance in that regard comes to naught.

Consider when there is disagreement over what constitutes the common good within a given society, surely one such view will win out over the other in the political arena, which most likely results in using the power of the state to forcibly compel some of its citizens to follow a policy it disagrees with. Right now the good old U.S. of A., charged as it is with the vigilance of the common good, is making it compulsory for any Catholic employer (lay or clerical) to subsidize birth control and abortion against the dictates of his conscience. Does the Pope regard this development as one where the state is rightfully exercising its control over an ideology which defends “the absolute autonomy of the marketplace”? Whether or not the Pope thinks so, I can tell you right now Obama and the Democratic Party does. Careful what you wish for!

Catholic social teaching has long championed the concept of subsidiarity – which holds that societal problems should be handled at the lowest capable unit of society. Resolution of such problems should start at the family unit, progressing sequentially if no resolution is possible to civic associations, parishes, local governments, state governments, and finally federal governments. Excepting the family for the moment, what you’ll notice as you progress up this list is that one’s own connection to such organizations is progressively less voluntary (i.e. civic associations are entirely voluntary, and mobility from town to town is easier than that from state to state, which is again far easier than nation to nation), and secondly that those empowered with making decisions become more and more remote from those for whom decisions are being made. (Within the family unit, obviously kids do not choose their parents, but husband and wife do, and they are far more vested in the well-being of their children to merit decisions being made by politicians who are entirely removed from the consequences of their policies.) The concept of subsidiarity suggests the obvious – that the federal government, rather than the family unit, should be responsible for providing for the national defense, and conversely that the family unit, rather than the federal government, should be responsible for providing for the well-being of aged parents.

This is the danger – when the federal government takes upon itself the functions that are best fulfilled by the more intimate and responsive “little platoons” (Edmund Burke’s phrase for the mediating institutions that form the fabric of civic life), they tend to destroy the ability of such little platoons to play that or any other role. The result is seldom as intended, and it matters not a bit if the state is motivated by beneficence. The state, being the largest and most powerful organization within the social chain, always survives the destruction of the little platoon. Once it kills off the little platoon, the problems created by the state cannot be handed back to the little platoon, and as a result those problems reinforce the case for even more state power.

Want an example? When the states of Europe decided to take on the responsibilities for the aged through forced savings on their part, it did not take long for Europeans to figure out that the same taxes are paid and the same benefits doled out no matter the number of children you have raised. In contrast to the bad old days, when having children was in part a way to invest in your own care and protection while you were young and energetic enough to raise them to be responsible to society and to you in your old age, now you knew you’d get a check just for showing up at 65. The predictable result – increased tax burdens made it harder to raise children, and less economically important to do so – so people had fewer kids. This was individually rational, but collectively crazy – there is no next generation to pay for the current retirees, and now those economies are in crisis as a result. To paraphrase Mark Steyn, the problem with socialism isn’t that eventually you run out of other people’s money, the problem is that you eventually run out of other people. But not this - that crisis will demand a state response, because it cannot be handed back to the children who were never born.

Similarly, it is a sad economic reality of life that feel good policies that intervene in free labor markets to alleviate the plight of the poor often have the very opposite effect. Earlier this year, the Pope was questioned by an unemployed worker in Italy who was lamenting the indignity of being out of work. True to the sentiment of his writings, the Pope decried the system of international capitalism as the likely culprit, but he needn’t have looked further than the laws in place in Italy to protect that man from being fired by any employer. Throughout Europe, the state imposes very hefty fees to firms who fire people. The naïve purpose is to dissuade companies from laying people off, and it no doubt has this affect once they are hired, but unfortunately that is not the only effect. The law also obviously dissuades people from hiring new workers, and is largely attributed as the reason for much higher levels of unemployment in Europe versus the United States. Net effect – the law increases the unemployment it seeks to end. It is the supposed beneficence of the state, not the cruelty of capitalism, which leads to that man’s unemployment. In theory the market stands ready to take on this social problem should the government understand the folly of its ways, but in reality such laws dampen the entrepreneurial spirit of the people, or otherwise drive it away to more hospitable economic climates. And so again a problem created by the state will lead to the demand for the state to find a solution.

We can make the same observation with the health of the Catholic Church - aside from the economic ignorance displayed in the Pope’s comments, the thing that is even more striking as a Catholic is the cover given to the legitimacy of political power, when the health of the Church is typically inversely related to the use of political power for this same reason. The state, as it turns out, is a more jealous god than God! In Communist countries, religion was rightly viewed as an obstacle to state power, and was summarily eliminated. In the Western world, as state power has grown, it has squeezed out or minimized the Church in more benign ways, many of which align with the anti-poverty concerns of the Church.

To give but one example in the United States, all children can go to secondary and primary school tuition-free, which is not to say that they can go to school cost-free. The fees are paid through property and income taxes, the payment of which limits the income available for Catholic parents to instead pay a cost of $5k to send their children to a Catholic school. A Catholic family is on the hook for the school taxes whether or not it attends the public school, and the majority choose to attend the public school at zero marginal cost.

The states could have established a tuition-free system of education that could have offered vouchers of equivalent value to be spent at a school of your choice. Such vouchers would have been more than adequate to cover Catholic school tuition, as it in general spends a much lower amount per pupil as compared to public schools. Insisting upon public provision, rather than simply seeking public financing, empowers the state to decide what educational content is in the best interest of its subjects, at the direct cost of the citizens. On its face, it is a benevolent policy, but it empowers government at the expense of the powerless.

Consider, then, what effect this simple policy of exclusion has upon the influence of the Catholic Church. Aside from the obvious benefits of educating the next generation of Catholics in the faith, having vibrant Catholic schools would also increase the participation of parents in parish life. The state, as I said, is a jealous god, and we are the poorer for it.

Finally, consider the family and its role in protecting children. The Pope understands that there is a crisis here:

The family is experiencing a profound cultural crisis, as are all communities and social bonds. In the case of the family, the weakening of these bonds is particularly serious because the family is the fundamental cell of society, where we learn to live with others despite our differences and to belong to one another; it is also the place where parents pass on the faith to their children.

But he doesn’t seem to understand the role the state has played in this crisis. While not the sole source of the crisis (I would put the sexual revolution in there as a co-equal cause), welfare policies implemented by the states have helped leave families in tatters, with single mothers choosing the certainty of the state’s check over the uncertainty of the father’s work ethic.

The Pope is right to be concerned with what Ropke called morally callous economism, which Ropke defined as “the incorrigible mania of making the means the end, of thinking only of bread and never of those other things of which the Gospel speaks.” Ropke shared the concerns of the Pope in creating a human-centered economy, railing against the tendency of economism to “allow material gain to obscure the danger that we may forfeit liberty, variety, and justice and that the concentration of power may grow, and it is also economism to forget that people do not live by cheaper vacuum cleaners alone but by other and higher things which may wither in the shadow of giant industries and monopolies.”

If the culture is already pre-disposed to think only of bread and circuses, then free markets may lead to the further encouragement of that materialistic focus. In so doing, a free market economy may also take us further down the road to ignoring other values – even those of us who never set out to focus only on material objects might end up that way with the constant bludgeoning of advertisements we expose ourselves to. However, the danger inherent to excesses of consumerism are not best addressed by the state. In fact, they are best addressed by those little platoons – the family, the local community, the civic associations such as parishes, etc. that create true community – that is, all of the institutions whose survival is in jeopardy if the state becomes more powerful.

The Pope rightly laments the “lack of real concern for human beings” which leads to the reduction of man to “one of his needs alone: consumption.” I’ve written before about how the right to abortion reduces human life to a consumption choice: if motherhood is a choice that can be rejected on the basis of inconvenience to the lifestyle of said mother, it is not unlike the choice to buy a Coach bag or a Fendi purse. In such an environment, it is hard for me to understand in what way unfettered capitalism can lead to a more bluntly consumer culture. (I know others like to define the beginning of life in such a way that they can reject this conception, but the Pope certainly is not in that group.)

Here, then, would be one example where the state could surely step in and save the day. But don’t hold your breath – in the U.S., the most overtly religious nation in the Western world, not only is abortion considered a right, it is heavily subsidized. The Church, through its ministry and its appeal to conscience, has been and hopefully will continue to be the largest brake on such excesses of free markets. Unless, of course, it embraces the power of the state at its own expense. And then what it will get is the subsidization of anti-Christian “art” and free condoms, but no jobs for the poor.

Friday, November 22, 2013

A Proof That College is Unnecessary

Ever heard of the marriage premium? It amounts to a basic observation – that married people make significantly more money than single people (on a per worker basis). I am guessing that this is an observation that controls for age and education, but I am not sure. Is it causal – does getting married make you more productive? Or is it a selection bias – are more productive people just more inclined to get married? My bet is selection bias, but I can also see an argument for marriage forcing more responsibilities on people, which makes them more responsible in all spheres of life, and hence worth more to an employer.

The marriage premium is roughly equal in magnitude to the college premium – the extra earnings that are associated with a college degree. And yet few people ask the same question about the college premium – i.e. whether college schoolin learns you up to the point where you can make more dough, or if instead the higher earnin is due to the fact that those inclined to go to college are already equipped with the skills necessary to bring in the Benjamins. I think most people see the college premium as causal. But consider this thought experiment – take your average non-legacy C student from Harvard (i.e. one that got in on his own merit), and ask whether his observed superior earnings to the average A student from Sam Houston State is selection or causation? If we see the Harvard kid earning significantly more ten years down the line (as I expect we would), is this because the C student learned so much more scraping by at Harvard versus the A student at Sam Houston State, or are we simply comparing one kid whose SAT scores are double that of the other?

If the college premium is a matter of selection, and not due to a story about value-added in the four years of college, this would imply that the vast sums of money spent on college tuition are a colossal waste of money. I once read about studies regarding the complete inability of employers to predict future job performance in certain jobs on the basis of interviews with the candidates. And yet employers think that they have just such an ability. It’s a classic case of “substitution” – the question of who would be best at a given job is hard to answer on the basis of a 30 minute interview, but it is easy to answer the question as to who do I like, or who reminds me of my own bad self as a youngster, and that is who we likely end up picking.

If as a white collar employer you know the interview is worthless, you would just pick recent grads on the basis of GPA and prestige of school, not necessarily in that order (assuming difficulty of the major is controlled for by the nature of the job – i.e. no one is looking to hire an English major for an engineering job). However, given rampant grade inflation has compressed the range of GPAs both within and across schools to be very narrow, you can safely ignore the GPA (assume “pay your fee, get your B”), and you are left making decisions on the basis of the prestige of the school.
Now take this one step further, and regress back to what determined who got into Harvard versus Sam Houston State. It was no doubt a bizarre combination of parental lineage, SAT scores, and the number of oppressed groups a candidate could claim membership within. For a legacy, subtract 200-300 points from the average SAT score for that school; similarly, subtract 200-300 points for each historically oppressed group the candidate claims membership within. If the job candidate is Asian, add 200 points – if this is literally off the chart for the SAT score, you are probably still underestimating his intelligence. Or, better yet, ask them directly what score they received on their SAT. And there you have it – if you are looking for the smartest kid to hire, do it exclusively on the basis of comparative SAT scores. No need for them to go to college. In fact, no need for college.

No need for college? That is correct, I just proved it mathematically. QED. Ergo! Caveat Emptor! Ever heard of Socrates, Plato, Aristotle? Morons. Actually, they were kinda smart, but you don’t need to go to college to know that. As a matter of fact, you can probably download all of their writings in various different English translations onto a $50 Kindle for free. Well, so maybe reading all of that stuff without the context added by a tweed jacketed guy who constantly rubs his bearded chin while striking a philosophical pose is a grossly inefficient way to learn what you need to know. (I don’t mean to be sexist – there are plenty of tweed jacketed women in academia who also rub their beards). If that is your cup of tea, you can go to college and take a course with a guy who smells of pipe smoke and waxes philosophic. If you go to a college with a $40K tuition, you can take a 3 credit course that provides you approximately 37.5 hours of instruction at an hourly rate of approximately $106 per hour. You might say that’s over-estimating it, as surely there are cheaper colleges. But then again, MIT certainly costs that much, and rather than moving to the dismal climate of Boston, you could just get a $40 per month internet connection and watch the MIT lectures for nearly every class online at no additional cost. From your couch. While eating bon bons in your underwear. Education is an information good, and the cost of information has basically dropped to nothing, but there you are spending hundreds of thousands of dollars for a fictional earnings premium. Look at that - I’m proving the superfluity of college again with completely different math.

I can hear your objections right now. But Hatcher, if we shut down all of the colleges, how are kids going to be able to learn how to drink in excess, do recreational drugs, and learn the nuances of having meaningless sex? I can say on the basis of personal experience that college has no guarantee of providing such knowledge – I only mastered the first of the three, and felt obligated to get a Ph.D. to complete my education, and still came out 1 for 3 (although to my credit, I did become mediocre in foosball during graduate school). But nonetheless, even for those convinced they will get a more rounded experience of debauchery than me, there is a very simple answer. Get a plane ticket and rent an apartment in Amsterdam for your kid for one month, stake him with an extra $10K for spending, and he can do all those things legally for one-tenth of the cost and one fiftieth of the time required to send him to college.

But Hatcher, if we shut down all of the colleges, all of those crazy leftwing humanities professors will escape the ivory walls we’ve managed to encase them in and spill into the streets. That is a legitimate concern, but it is not hard to predict what ends up happening. Suppose, for example, they tried to simply go on doing research and writing articles with titles like “The Flintstones and American Misogyny,” and then tried to drum up people to pay for them to lecture to them about similar topics. Do you think they’d have willing buyers? They do within the confines of the “ivory tower” due to a few factors: 1) the sales value of the fiction of the causal college premium; 2) they collusively with the students keep the course less than rigorous so as not to get in the way of kids learning to drink to excess, do recreational drugs, and have recreational sex, and therefore the kids never tell their suckers … er, I mean parents… what kind of crap they are paying for; and 3) heavy government subsidization. Take away these factors, and leave these people to their own devices to shop their wares on the streets of your community, it will take all of two weeks before the extent of their lectures amounts to “Welcome to Starbucks, can I take your order?” Although they will be working for a multinational profit-driven corporation, they can pat themselves on the back for only selling fair trade coffee. And finally they will providing a useful service. It’s a win-win for everyone.

But Hatcher, what about the vital things we learn in these classes that prepare us for the work world? Cue crickets chirping. Bwahaha! Like I said before, if you are wise enough to pick a major that has actual real world applications, just fire up ye olde internet and suck down a course or two a week if you are so inclined. The bonus for you is that no one will require you sign up for a certain amount of credits in the college of liberal arts in order to make you a “well-rounded” student (which is code speak for – we cannot convince enough people to actually major in this crap to justify keeping these aged hippies employed, so you gotta take a couple of these courses from these freaks). This is the business genius of the college model – for a course you could literally see every lecture for on-line in the course of a week, they stretch it out for 15, make you take other courses you don’t want to take in combination, and require that you be in near proximity so that you end up purchasing your food and lodging from the company store. Once upon a time such was necessary, but now it’s just admirably ingenious larceny.

For those who set out to college to study Post-Modern Feminist Pedagogy and similar inane studies, the good news for you is that the elimination of colleges doesn’t mean you will be missing out on learning any pliable job skills. Those majors are the pride of the university system, because after pouring $200K and 4 years of your life into learning how to express your scorn for your parents using big obscure words that your parents don’t understand from the made up vocabulary those fields are famous for, your only option is more schooling. Either you head off to law school (as the dean licks his lips over three more years of high tuition), or you decide to get a Ph.D. in said field and become a professional crank. Don’t even think about medical school, because they generally want some knowledge beyond reading at a tenth grade level as a prerequisite for entry (because they’re fascists!).

Wednesday, November 13, 2013

The War Against Children, Educaton Spending, and Speech Therapy for Your Drunk Uncle

One of the more depressing aspects of the most recent presidential election was the success of the “war on women” meme, which improbably worked in convincing a bunch of 20-something women that Mitt Romney had a deep and abiding interest in taking away their birth control (or, perhaps more precisely, simply refusing to pay for it). The success of this campaign was probably bolstered by the fact that few of these women could get a job in the Obama economy (women’s employment and workforce participation rates are down significantly under this President), and therefore spent much of their time getting their freak on and worrying about the potential consequences therefrom. (The alleged desire to take away birth control was the only new aspect to “women’s issues” – the dividing lines on abortion were no different in 2012 than they were in 1980. It was only after the election that we’d find out about the butcher Gosnell’s murderous abortion clinic, and the complete indifference to women’s safety displayed by the agencies responsible for regulating Gosnell’s house of horrors.)

And so a national election literally turned on a non-issue invented by George Stephanopolous with one question in a Republican primary debate, and the petulant whining of a law student whose contribution to the proud history of women’s liberation was to convince her cohort that it was grave injustice that they themselves, or in combination with their partner, would actually have to foot the bill for knocking the boots. It’s a sad testament to the power the media has to “frame” the issues that become important in an election. There is no doubting that this had a discernible effect on the election, and it is hard to imagine a more frivolous election issue, but such frivolity was necessary to distract people from the failure of the Obama administration to make any headway with the economy, let alone in its foreign policy, which is something of a joke, at least to our enemies. If future historians ever wish to point to a turning point that displayed the utter lack of seriousness in our political culture, they need not look further than the 2012 war on women.

A more serious issue that will be increasingly part of the media “frame” for current and future elections is income inequality. There is no doubt that the degree of income inequality is rising, both in the U.S. and in most developed countries. The fact of income inequality is likely to redound to the favor of those who seek to rectify the inequality by simply moving dollars from one hand to another. Obama famously told Joe the Plumber it’s time to spread the good fortune around in 2008, and followed that in 2012 by telling successful business owners your success is owed to someone else who built your fortune, and by extension now has a claim on your income through the coercive power of government to redistribute as it sees fit. More recently, the newly-elected Communist mayor of New York city lectured that it is only fair that the richest among New Yorkers (many of whom will soon be New Jerseyans) give a little more (a quaint euphemism for having more taken from them in taxes at the penalty of prison) to create more equal opportunity.

Income inequality and equality of opportunity are not one and the same. Greater redistribution presumably has two mechanisms to address income inequality: 1) the direct way is by simply thinning out the rich and giving directly to the poor, which may or may not have an ancillary effect on equality of opportunity; and 2) alternatively, the higher tax revenues can be used to improve educational opportunities for impoverished youth, which may directly provide more equality of opportunity, and indirectly might improve income inequality. And this is where the never-ending demands of the public education establishment come to the fore. Who can deny a kid an equal opportunity? Someone who opposes the latest increase in school spending, no matter the lack of evidence that higher spending improves educational outcomes – that’s who.

Are we shorting poor kids in education spending? In 1970–1971, the per-pupil expenditures were $5,593, and in 2006–2007, those same expenditures are measured at $12,463. In contrast to the spending, test scores haven’t risen since the early 1970s (Tyler Cowen, The Great Stagnation).

Of course, this is only average per pupil spending, and there may be significant and growing differences in spending per pupil in rich versus poor school systems. But while this may be true in some states, at the national level Washington D.C. is second only to the state of New York in per pupil spending, at close to $16,500 per kid. Here’s a little secret about Washington D.C. – there are a lot of very rich white people who live in Northwest D.C., who being card-carrying liberals dutifully pay their taxes and don’t complain about the schools. There is a reason they don’t complain about the schools – they wouldn’t be caught dead sending their kids to any of the public schools, because the schools are a disaster. They exist to serve the middle class administrators and teachers, and more importantly the union that represents them, and educational outcomes are a non-factor.

Compare the DC figure to the Leander school district in Texas, a state that ranked 43rd out of 50 in education spending in 2010, when the per pupil spending in 2010-11 was approximately $7,300. (This appears to be roughly in line with the average in Texas). My kids attend Leander schools. Prior to attending Leander schools, they were all enrolled in Arlington County schools in Virginia, which boasted per pupil spending of over $18,000 in 2012. At that time, my first and fourth graders were in classes with 25 other kids; that equates to an astounding $450,000 per classroom, but don’t expect a fifth grader in D.C. to be able to make that calculation. Hands down, the Leander schools we attend are superior to the Arlington schools we attended. My kids are challenged in every class here – they do far more writing, have much higher study demands, and have more inspirational teachers with more energy (it helps, I think, that the schools they attend here are less than 8 years old, and there is little deadweight in the form of tenured teachers who are total slackers, which we definitely saw in the older more established Arlington Middle School my kids attended).

How is it that the Leander schools with half the budget are so superior to the nationally recognized Arlington schools we attended? How is it that the D.C. schools, despite spending that is roughly in-line with the nationally recognized Arlington schools, are such a disaster? There is a simple reason, and it relates to the overall investment in the education of kids in these different districts. In my neighborhood in Texas, there are very few single parent families – I know of none personally, and I am a pretty social guy; moreover, the norm here is the more traditional single income family, typically with mothers staying at home to care for the kids. In Arlington, within our school district, there was more economic diversity, and a non-negligible portion of single family homes; additionally, many of the more well-off in the neighborhood were dual-income families, where both parents had significant work demands. And finally, in D.C., there is a very high proportion of single parent households left with no other option than the D.C. public schools.

If there were a way to measure the overall investment in the education of kids in my current neighborhood versus Arlington and D.C., I think you’d find we are spending more per-pupil by a wide margin. (Or, alternatively, if the direct parental investment is small in actual dollars, it is nevertheless necessary for the school spending portion to yield any success.) This means that not only are our kids coming in prepared for class, their classmates are as well because their parents, like us, are cracking the whip at home, helping with homework when needed, encouraging and rewarding their childrens’ efforts, and seeking opportunities outside of the traditional school environment to enhance their childrens’ education. With classmates prepared and motivated to do well, the peer group effect kicks in to reinforce the parents’ efforts at home. A motivated and prepared student body attracts better teachers. Maybe the parental investment is small relative to the per-pupil spending, but it appears to be necessary for educational success, and can clearly more than overcome any shortfall in per pupil spending.

I’m not sure if the inferiority of the Arlington schools we attended is due to the dual-income households, or the relatively higher proportion of single-parent households. Maybe it’s a little of both. Many of the dual-income households I knew personally were very vested in their kids’ education, but honestly having seen the work required of parents in our Texas schools to keep their kids on track with the higher homework demands I see here, I am not sure that increasing the workload for kids in Arlington would be met with much fanfare, especially since everyone in Arlington is already convinced that their schools are top notch.

Take my anecdotal comparison for what it’s worth, but I think there is a simple underlying truth – you can throw as much money as you want at educating kids in single-parent households, but these kids are generally more prone to lacking any corresponding investment in their education from home. And even if their single mom (the typical case) is making Herculean efforts to stay vested in their education, the likelihood is that she lives in a school district surrounded by other single-parents not so invested, and so her kid is still surrounded in school by a peer group that thinks doing well in school is not so cool. It’s hard to learn if the kids surrounding you are throwing paper airplanes past your nose, while your teacher pops another anti-anxiety pill.

If these observations aren’t self-evident to you based on your own experience of parenting, wanna trade kids? And if they are self-evident, isn’t it time to acknowledge that the source of inequality of opportunity is not a failure to support public school spending? I don’t doubt the earnestness of many public school teachers in these beleaguered school districts, but I’d be surprised if many of them believe that the educational outcomes of their students could be significantly improved by increased spending. Who believes, for example, that a doubling of per pupil spending in DC would change anything? Democratic politicians always beat the drum of increasing public school spending, which serves them directly through support of the very powerful teachers’ unions. But the increased spending is usually so disconnected from educational outcomes as to be laughable.

If you want to increase equality of opportunity, a worthy goal indeed, you have to address the fact that 40 percent of children born today in America are born to a single-parent household. For these kids, there is no over-coming the deficit they face relative to their more fortunate peers who go home to Mom and Dad. This is not the fault first and foremost of “society”, and it certainly isn’t the fault of capitalism; it is most directly the fault of one or both of two parents who purposefully screw over their kids.

So here is a little “framing” for ya – there is no war being waged in our culture, political or otherwise, against women. This is a fiction of the liberal imagination. In contrast, there is a war against children being waged primarily by their own parents, and the opposition to children in that war has the full support of a popular culture that is wedded to the notion of sexual freedom without judgment, and a political culture that is wedded to the welfare state as a means of spreading the cost of the cultural capitulation. The war pits parents against their kids, and there is no doubt which side the cultural and political left sides with.

Fifty years ago, if you were unlucky enough to be born to a single-parent home, you were one of 25 in that position, and so you were surrounded in your classroom by kids much like those who surround my kids in their current schools. But as that number grew to 4 in 10, very naturally the other 6 in 10 gravitated to separate neighborhoods, so that now the 4 in 10 have little experience, even indirectly, of successful marriages. One in twenty five can be chalked up to accidents will happen; four in ten is a sign of deep cultural crisis. For those four in ten, their first lesson in life, fully supported by the popular culture, is a duty to making yourself happy – if marriage and parenthood is an obstacle to that duty, no one blames you for walking away from both. They are damned to repeat that lesson for their own kids. And yet, when election time rolls around, we are asked to ignore the elephant in the room, as if the stork has just randomly ramped up delivering babies to unsuspecting single woman.

Chances are that if you are reading this, or if you are involved or interested in the debate over equality of opportunity or income inequality, you were raised in a stable two-parent family. The President himself is a notable exception, but I think we can all safely agree that the odds of most kids abandoned by their father parlaying a memoir replete with composite white girlfriends into leadership of the free world are exceedingly small. And yet one side to this debate doesn’t notice the key factor that distinguished who is engaged in the debate versus who the debate concerns. It is as if a completely sober nephew is going to great lengths to get speech therapy for his uncle who slurs his speech because he’s drunk all the time. It’s called enabling.

Wednesday, October 23, 2013

What You’re Sold vs. What You Really Get

Have you ever bought your kid a cell phone? You talk yourself into that purchase based on a pretense of what the actual use will be. You convince yourself that you are not buying the phone just to cave into the constant begging, but instead you are doing it for your child’s protection. What if his car breaks down? What if she gets stranded at a party by her drunk friends? What if there is a shooting at her school? What if the zombie apocalypse is coming his way? What if the TIVO fails to record Impracticle Jokers?

But then your son gets that phone. And you quickly realize that all the “what if” scenarios are highly remote, especially given the progress in DVR technologies. And one month later the unaware among us, who thought a plan allowing for 10 texts per day would be plenty for handling ten potential emergencies, find out that our kids classify “emergency” in a slightly different way, such that it is necessary to send 200 texts per day. And what do we do? We don’t yank the phone, we increase the usage limits on the phone. And then we look at our kid in a very puzzled way as he takes a picture of himself with said phone in the chiropractor’s waiting room while seeking treatment for for i-posture.

The actual experience of government is a lot like a parent’s experience of buying that cell phone for Junior. There is in fact a plausible pretext for government – namely that there are certain types of goods, which we call public goods – that may in theory be underprovided in private markets. (As a point in fact the private sector does often provide significant public goods, but that is a point for another day). Public goods have two features: 1) they are non-rivalrous – the benefit you derive from a public good does not preclude me deriving benefit; and 2) they are non-exclusionary – I cannot stop you from enjoying the benefits of a public good even if you have refused to pay. In contrast, if I buy a car, a classic private good, my purchase prevents you from purchasing the same car, and you do not benefit from my use of it. As the theory goes, absent the government instituting compulsory taxation, people will free ride the donations of others for the provision of public goods, and therefore such goods will be underprovided.

Provision of public goods as the central benefit of government is the analog to the zombie apocalypse heading for Junior – it is how you talk yourself into buying government, but it has almost nothing to do what you get from it. With respect to the budget of the Federal government, in his book The End is Near and It’s Going to Be Awesome, Kevin Williamson points out the following:

“…two dollars out of every three dollars the federal government spends is spent on something that does not come close to meeting the definition of a public good. To put that into perspective, if the federal government limited itself to the provision of real public goods, we could abolish the personal income tax and balance the budget (and in fact produce a large surplus) overnight.”

The two out of every three dollars not going to public goods are transfer payments - private goods delivered to some at the expense of others. In an example that is too good to be true for this analogy, at the time of last year’s election we learned that our government must have had the same concerns for the poor that we had for our children – that we’d have no way of getting a hold of them in the event of an emergency – and so the government started giving away cell phones. (Either that or they just like giving shit away for free, which is obviously where the analogy between government and parents breaks down).

In theory with government you get the optimal provision of public goods, and by supplying your kid with an i-phone, you get peace of mind. In reality, in both cases you get a population of ornery teenagers or their equivalent (adults infantilized by their welfare dependency), obsessed with posting pictures of themselves online, and indignant that either their parents or their government thinks they should pay any fraction of the bill.

This is why whenever people start to question the massive redistribution of government, what you hear ad nauseam from the liberal camp is the need to invest or re-invest in things that are public goods (or reasonable approximations thereof). It’s equivalent to threatening your kid with pulling his cell phone, with him adeptly rattling off ten instances of child terror that could have been prevented with a simple speed dial.

Even if all new proposed government spending would be on quasi-public goods like transportation infrastructure, there is every reason to think that the government project is doomed for failure. Similarly, even if your kid promised he would never use his phone unless there was an emergency, the likelihood is that in that event his battery would be dead. Take the pipedream of light rail. Light rail is a textbook example of the inability of the human mind to understand the complexity of large scale projects in the budgeting process, which manifests itself in budgets that are laughably unrealistic, and in forecasts of benefits that are even more absurd. Most light rail projects have yielded the equivalent of literally digging a whole, throwing vast sums of money into said whole, and re-filling it. Dead battery indeed.

Daniel Kahneman refers to this as the planning fallacy, and discusses the persistence of it for rail projects even as experts became aware of it:

A 2005 study examined rail projects undertaken worldwide between 1969 and 1998. In more than 90% of the cases, the number of passengers projected to use the system was overestimated. Even though these passenger shortfalls were widely publicized, forecasts did not improve over those thirty years; on average, planners overestimated how many people would use the new rail projects by 106%, and the average cost overrun was 45%. As more evidence accumulated, the experts did not become more reliant on it.

The private sector is no less inclined toward the planning fallacy, but the pie in the sky plans of the dreamers still need the backing of the skeptical financiers, and even if they have that backing initially, the plug can be pulled prior to creating a business that needs a constant subsidy to maintain. At the end of a project that puts into place a commuter rail, it is typical to have to subsidize rail rates to keep the trains running. No surprise there, since the project was sold with estimates of ridership that more than double the actual ridership, based on a budget that is 50 percent shy of actual the actual costs to construct.

Consider the Hoover Damn. Much fun was had by the conservative press at the expense of Rachel Maddow, who stood atop the Hoover Damn in the lead up to last year’s election, and proclaimed only big Government can build the Hoover Damn. The Hoover Dam was built to generate electricity, which is a private good. If the massive investment in building the damn were justified by the cash flows that could be earned subsequently in the sale of electricity, there would have been private companies willing to make that investment. But the Dam was never a good investment – and so she is correct in saying that only Big Government can make a doomed investment, because they don’t exactly have to convince their “investors.” This is not really a good thing. The Government is uniquely capable and more than happy to throw your money away.

President Obama famously chuckled to the press over the lack of actual shovel ready projects that were to be the cornerstone of his disastrous fiscal stimulus efforts. In truth, there probably were many shovel-ready projects, but government, in addition to robbing from Peter to give to Paul, is also deep into the business of anti-shovel regulation. If you were to try to build the Hoover Damn today, you’d first have to run the gauntlet of the EPA, the National Park Service, OHSA, and various other federal agencies tasked with making sure the private contractors enlisted for the construction have employed the proper union labor, and additionally employ the proper number of minority women veterans maimed in various ways in the service of their country. Odds are there is a lot of economic activity generated in the process – that is, money changes hands from taxpayers to more bloated federal bureaucracies and some high-priced law firms – but ultimately nothing gets built. In the rare case where the project does go through, we get the double whammy – a project that probably didn’t make sense in the first place under ideal conditions is made three times as expensive by the paperwork necessary to get past the regulatory gatekeepers.

Cell phones for kids are useful for entertaining them, and government is good for redistributing money. We shouldn’t suffer from the delusion that it is any other way.

Friday, October 04, 2013

Marriage for the Protection of Barbarians

It seems in the wake of the recent Supreme Court decision gay marriage is a fait accompli in America.  I have friends who view this decision as unequivocally a triumph of tolerance and love over bigotry and hate.  Although I’ve never really expressed my views on the topic before, I am sure many of them can guess my ultimate stance, and to their credit I think for the most part they view it in my case as a character flaw that is trumped by other positive qualities, and so they tolerantly overlook it.  There is a real cognitive dissonance in tolerating the views of those opposed while at the same time viewing all opposition as bigoted and hateful.  It is hard to imagine, for example, that these same people would be as forgiving of me if I were a known racist, and on that basis opposed to basic civil rights for black Americans.  Hard to get passed that one!  If you view gay marriage as a civil right, those who oppose it are equivalent in some sense to the Bull Conners of the world.

Being against gay marriage, I clearly do not view my own opposition as fueled by hate, and so one purpose of this article is to explain such opposition.  A second purpose is as a plea to those on what appears to be the winning side of this issue to practice the general tolerance they preach in accepting people as they are, specifically to the broader issue of religious liberty.  This requires tolerance of opinions currently held that proponents of gay marriage currently view as motivated by hate, which is a tall order indeed.  For the second purpose to be accomplished, the first must be accomplished and well – you need to buy an explanation for opposition.  But I believe the stakes are high, because I believe religious liberty is currently under great threat in this country, and that the threat will be trebled in the aftermath of gay marriage becoming the law of the land.

The public debate in this case, as is true for many contentious issues, is regrettably reduced to bumper sticker slogans that do not capture the subtlety and complexity of the issue.  On the pro-traditional marriage, people retreat to the “marriage is by definition between a man and a woman,” and on the pro-gay marriage side we hear gay marriage is an issue of equal rights.  Both of these arguments miss the mark.  While traditionally marriage has been defined as between a man and a woman, there is nothing to stop us from changing that definition – some reason beyond tautology is required to convince people in a democracy not to broaden the definition.  And diminishing the argument to one of equal rights is also misleading, because we each have an equal right to marry someone we are capable of having a biological child with, although we may differ in our inclination toward such relationships.  Marriage, historically, has never been viewed as a right to marry the person one loves; instead, it arose as a way for parents (and in particular fathers) to commit to each other and their children.  This commitment is the only broader social benefit stemming from marriage, and therefore it is the only reason for maintaining and supporting it as an institution.  Traditional marriage defined as an institution for a man and a woman in a sexual relationship is not a discrimination against same sex intimate relationships, it merely arose as such due to the unequal nature of such relationships: One yields helpless infants and the other does not. 

Does homosexual marriage undermine, bolster, or have no effect upon the child-protecting societal benefits from traditional marriage?   The societal interest rests upon that question.  Certainly nothing prevents a society redefining marriage to be more expansive.  Broadening the definition to encompass homosexual relationships is one way to broaden the definition.  Allowing polygamy is another.  Allowing minors to marry adults or each other is yet another.  Each of these changes may have different and independent effects on the child protection inherent to traditional marriage, so that it is possible to still support gay marriage, but to oppose polygamy and the marriage of a 13 year old to a 22 year old. 

If allowing homosexual marriage weakens traditional marriage, there is a cost to society that may merit leaving marriage unchanged.  Conversely, if homosexual marriage strengthens traditional marriage or leaves it otherwise unaffected, there is a benefit to society that may merit changing the definition.  While the bigot may, in a knee-jerk fashion, decide that broadening the definition will undermine the child-centered purpose of traditional marriage, the likelihood is such bigots will not go to the trouble.  But surely someone who is not bigoted can come to the same opinion as the bigot based solely on the question of the effects of homosexual marriage on traditional marriage, without any animus toward homosexuals, and on that basis oppose broadening the definition.   

How Did Marriage Arise?

Much of what follows is me speculating an anthropology of the institution of marriage that has most likely already been proved or disproved in whole or in part by people who actually do research rather than simply spouting off about what they think was true in the past, so take it for what it is.  However, whether what I describe is factually accurate or true to your own experience or not, the argument still has merits that I think everyone can understand.

Marriage as an institution exists in all societies, pagan and religious, and predates both the rise of organized religion as well as the modern state.  Every religion has its opinions on marriage as a special relationship that has specific duties beyond the general golden rule (in Christianity, love one another as I (Jesus) have loved you), because such duties arise naturally from the consequence of sex between a man and a woman – children.   Readers familiar with this blog can make the general economic observation that children can be viewed as a negative externality from the private choice to have sex – that is, there is a large cost in the rearing of a kid who arises from that initial gleam in his father’s eye.  The cost of sex has to be borne by someone, and if it is borne by someone other than the parents, we have a situation in which those who experience the purely fun part of sex do not internalize the cost of having it.  What you get as a result is way too much sex.  Someone has to raise the little barbarians, and it seems natural to stick that responsibility on those who had the fun to begin with.  Marriage is about imposing the duty of child-rearing on the parents. 

Now, the prior paragraph makes it seem that both Adam and Eve, if unconstrained by societal pressure to wed, would simply make the beast with two backs (that’s Shakespeare) as much as possible and leave the offspring to fend for themselves.  But of course the reality is that Eve will pay the price via nine months of pregnancy and the very real prospect of death during childbirth; and, even after the birth, she will have a natural strong affinity toward the little barbarian that she has birthed, enough so that she won’t merely walk away from it in pursuit of getting her freak on.  

So marriage really isn’t about getting the woman to buy-in to her duties to children – it’s about getting the guy to buy-in.  The guy doesn’t have the same natural biological commitment – he doesn’t carry the kid through development in the womb – and in general has less of a natural affinity to the kid after the birth.  You don’t see guys rushing to hold other people’s babies.  If society were in general polyamorous, the first reaction of any guy being told that his sexual partner were pregnant would be to ask for a paternity test.  Adam probably did the same even though there were no other candidates in the Garden of Eden other than the snake.  The Ten Commandments admonish coveting another man’s wife, not another woman’s husband; although I think the commandment generally applies in both directions, the bigger threat was the man being less conflicted about abandoning his own familial responsibilities in pursuit of some “strange,” as the kids these days say.  So the Jewish religion put the onus on the guy (in contrast to the Moslem religion, which views rape as the adultery of the woman, punishable by death, but I digress).

We have this general situation, faced equally by primitive tribes and developed civilizations – women are stuck with kids, and men are not.  In many species, this is no big deal, but the rearing of a human child is so all-encompassing that the resources of the mother are in general inadequate for the purpose, and there needs to be some way to lock-in dad to the process.  Historically, marriage has fit that bill.

This view of marriage – as a human institution that arose for the protection of children – is very much out of vogue, and I am not sure it was ever understood as such.  Perhaps no one has ever entered marriage with the primary reason being the abstract social desire for responsible rearing of children.  (There may be a little bit of Tom Sawyer painting the fence with marriage – just as Tom pretends there is nothing more fun than painting the fence so that his friends are suckered into doing it for him, society pretends the marriage relationship is this great thing so that it gets off the hook raising kids, and can go fishing.)  Nevertheless, historically any woman clearly had an interest in some viable form of commitment from any prospective mate, as her own economic prospects would be very dim if no commitment was forthcoming.  So there was a private motive on the part of women for something like marriage.  But the private motive in combination with a simple plea from Eve to Adam for sticking it out, absent some additional societal expectation for Adam to stand by his woman, is often insufficient.  There are many men whose natural affections for Eve and Cain and Abel are enough to assure commitment, making marriage superfluous for the purpose of the protection of women and children.  But there are also many who could care less, and lacking some form of commitment in advance of fatherhood, will prefer to get the milk without buying the proverbial cow.

Even the institution of the dowry – property granted from the family of the bride to the groom – probably arose due to the observation that men are not always willing to commit, and need some positive inducement for doing so.  And the dowry still persists even in America in the form of the bride’s parents often paying for the wedding reception.  In cases where a guy has managed to get the milk without the cow, negative incentives have also been in play - the “shotgun” wedding has always been a very real phenomenon in most cultures, although it is disappearing rapidly in many parts of the West due to the combination of changing sexual mores and government welfare programs.

Is the Purpose of Marriage the Validation of Fine Feelings?

The fact that weddings are usually celebrated in grand fashion is not primarily due to the abstract judgment that such relationships are inherently to be celebrated, although there is certainly reason to celebrate the willingness of two people to commit to the marriage vows, which within the Christian church at least require unconditional love (for richer or poorer, in sickness and in health, etc.).  There are many fine non-parental relationships that involve no sexual dimension – siblings, cousins, and even unrelated friends – these can even involve co-habitation, and the same admirable dedication and commitment to each other’s well-being.  But once you take away the sexual aspect of the relationship, and in particular a sexual aspect that can give rise to children, we don’t feel the need to validate such relationships with ceremony and celebration.  Either the private motives and  incentives between two friends are enough to fuel the relationship, or they are not – either way, there is no broader consequence from any falling out between two best buds.  No kid is left with feelings of abandonment if Hall and Oates decide to go their own way musically.  And because no kid is affected, there is no broader cost to society.

Indeed, if we think about a committed non-sexual relationship, in many ways such relationships are more admirable than ones that involve sex, as clearly most people view sex as a benefit.  Taking sex out of the equation removes one aspect of a relationship that may have the propensity for making the relationship more akin to an economic transaction, where each party is concerned primarily with what he or she gets from the relationship, as opposed to what he or she contributes.  Whatever we can say about these relationships, we know for a fact that the altruistic commitment shown is not driven in any way by a selfish desire for sex; in a marriage, the altruism may at its heart be a mask for self-interest. 

There are many fine non-sexual relationships, which by definition cannot give rise to children – and there has never been a society that has felt the need to validate such relationships with some form of commitment and or celebration.  And yet, all such societies have done so with respect to sexual relationships that can give rise to children.  Not one of these societies has ever stopped to ask themselves whether or not this disparity is not unfair to the brother and sister who voluntarily look after each other until death do they part.  That is, not one society has looked at marriage and thought that its exclusivity denied equality to other people who were engaged in other types of admirable relationships.  Why not?  Because such societies were aware from the start that a relationship that could lead to the production of a little barbarian was clearly different from any relationship that could never in a million years yield a little barbarian. 

Having no ceremony for Bert and Ernie was not due to any thought that Bert and Ernie, as individuals, were not equal to Adam and Eve; the difference in treatment was due to the fact that their relationship was unequal to that between Adam and Eve.  The lack of equality between the relationships has nothing to do with any difference in the admirability of the respective commitments to each other, but instead has to do with a simple biological fact: Adam and Eve beget Cain and Abel, while Bert and Ernie do not.  Perhaps Bert and Ernie are more altruistic in their commitments to each other than Adam and Eve – but no one really cares!  Even if Adam and Eve are at each other’s throats, once Cain comes along, we want them to know that we view them as responsible together for bringing him up.  The institution of marriage, rather that originating and being primarily motivated as a big disinterested pat on the back from society to two people who plan to copulate, is rather a very interested placing of a weight on their shoulders to stay together precisely because they plan to copulate.

Divorce Law Recognizes Protection of Women and Children Even with Dissolution of Marriage

With the ease of divorce, is marriage really a pushing together from society?  In the case of heterosexual marriage, the duty element has been reduced over time with the relaxation of divorce law, so that at least from the standpoint of the state, whether you stay together or not is largely a matter of indifference.  But even with divorce, if there are children from the relationship, there is an expectation of financial commitment from both parents to the childrearing, as well as a recognition that in many cases the mother (or, less typically, the father) has sacrificed her own economic prospects in dedicating herself to the well-being of the child, and is therefore due alimony.  Traditionally, raising a child demanded some division of labor – usually one person committed to the domestic, non-paying sphere, and the other committed to providing services in the market.  Upon divorce, the labor requirement for raising a kid doesn’t disappear, and even if or when it did, the economic prospects of a mother who has removed herself in whole or in part from the labor market for a long stretch of time are dimmer than they would otherwise be if not for the marriage.  Alimony recognizes this disparity, and tries to rectify it.  So divorce law is about enforcing the economic duties of parenthood on parents, whether or not they choose to stay together. 

Furthermore, whether or not the state allows an easy out, most of society views divorce as regrettable, and in part as a failure.  The Catholic Church (and others perhaps as well) views divorce very dimly, with remarriage being considered essentially adultery, unless you are granted an annulment (not a problem if you are a rich Boston politician), their more strict version of divorce.  Divorce, while in many cases understandable, is always an occasion for sadness.  How many of us have been to the wedding of a now divorced couple, and not been puzzled by how the relationship could descend from the joy we recall of that day to mutual contempt or indifference?  And what do people always say when they hear of an impending divorce?  Either they lament the situation of the kids, or they console themselves that at least there are no children.  Society’s interest in marriage is an interest in the well-being of children. 

So What, We Can Define Marriage As We See Fit

Marriage arose as an institution to protect women and children, and to put the onus of the cost of raising children on the mother and the father.   Only a sexual relationship between a man and a woman has the potential spillover effect to society of producing children, and therein lies society’s interest in marriage. 

So what if marriage arose for that purpose?  If many in society now view the primary purpose of marriage as a validation of fine feelings within a relationship that involves sexual activity, shouldn’t we recognize that excluding certain types of sexual relationships is discriminatory, and on that basis allow gay marriage?  Even if many now view marriage as a validation rather than as a means for the protection of children, not all have made this switch in perspective, and those who still regard its purpose as child protection are entitled to press that view in public policy.  Admittedly, marriage is already in a sorry state, so, as the popular formulation goes, how can two homosexuals getting married possible hurt two heterosexuals getting married?  Here is how: to the extent that the legal institutions of marriage are biased toward the view that marriage is about the mutual feelings of two persons within a fickle populace, as soon as one of those two people feels a waning of such feelings (and most will feel this at some point in a marriage), under the new logic of marriage, its splitsville.

The liberalization of divorce law, with the introduction of “no fault” divorces, has already gone a long way toward undermining marriage as a child-centered institution in the same way.  “I am not happy, and therefore if I have an affair that leads to divorce, how can I possibly be blamed for pursuing my own happiness?”  The corollary is the lack of social pressure for marriage brought to bear on the unwed parents (and in particular the father) of a newborn.  Here, your primary duty is to your own happiness, which is really the antithesis of duty, and this always trumps the duty to your children.  Marriage is intended as a commitment; no commitment is necessary if we are of the belief that as soon as one or both parties to it find it too constraining, it is best to break it.  Rather, we want the view of marriage to be such that people feel the responsibility to endure turbulent periods.  There is only one social reason we want this to be the case – for the sake of kids.  The two views of marriage – one as duty and commitment, and the other for personal happiness – are incompatible.  Whichever view you choose necessarily subordinates the other perspective as unimportant.  Gay marriage brings us a step closer to the personal happiness camp.  This, in my view, is a bad effect, and bad enough to oppose gay marriage on that basis.  I am sure it is asking too much for a gay person to see this view as not in the least discriminatory, but it is as simple as this – there is one purpose to marriage, and that purpose is undermined by gay marriage. 

Democratic Tolerance

Others may disagree.  Some may be of the opinion that the train has already left the station – i.e. you cannot turn back the clock and make marriage a duty; it is now and will forever be primarily about individual happiness, and opposing gay marriage is tilting at windmills.  Others may believe that the cultural expectations for the duties of married persons can differ according to whether children are in the mix, so that duty trumps personal happiness if and only if Junior comes along, and therefore gay marriage can be legalized without affecting the ability for society to protect children with straight marriage.  Still others may agree that there is something to the belief that gay marriage further undermines marriage as duty, and bolsters marriage as happiness, but believe that this negative effect is small (with most of the damage having been suffered without gay marriage), and sufficiently countered by the positive effects of validating committed homosexual relationships (and I do believe there are positive effects). 

I have no problem with disagreements over these questions.  I would gladly lose this battle in a democratic process rather than give up the democratic process.  But I do take exception to the narrowing of the debate insisted upon by those bent on painting those opposed to gay marriage as bigots.  I do not deny that there is anti-gay bigotry.  I do not deny that such bigotry may lead to opposition to gay marriage, but it does not follow that opposition to gay marriage is fueled always and everywhere by bigotry.  Equating opposition to bigotry is a hateful insult intended to stop debate rather than influence it.

I do not think the proponents of gay marriage are out to hurt children, although I do believe that may be an unintended consequence of their efforts.  Likewise, I would expect those on the opposite side of this debate to recognize that the opposition is not out to hurt gays, even if they believe that may be an unintended consequence.  People on both sides of this debate will differ both with respect to their views of the broader social consequences of legalizing gay marriage, and with respect to their motivations, but respectful debate requires taking people’s concerns and views at face value and ignoring potential motivations, rather than dismissing such views and assuming you know the opposition’s motivation.  I am six pages into this article trying to refute the bumper sticker logic of “opposition equals bigotry,” and I am guessing that a good percentage of the people in favor of gay marriage came to that opinion of me by the second paragraph, and stopped reading then and there, perhaps a little or a lot disappointed in me, but secure at least in thinking that they are my moral superior.  This is a nasty little habit that the current President is particular good at – treating most any issue as pitting the enlightened view versus the troglodytic view – and refusing to acknowledge any legitimate concerns in the opposing position.  It is a disservice to democratic citizenship, and it is the primary reason for the divisive partisan hatred that abides. 

Religious Freedom

The discussion of democratic tolerance leads right into the important topic of religious freedom.  The lack of democratic tolerance can lead immediately to the restriction of religious freedom and with it freedom of speech and conscience.  As a Catholic who has witnessed the current administration of the healthcare law take a form that requires the Church and its related employing entities (hospitals, schools, old folks homes) to provide insurance coverage for things the Church considers a grave moral sin, I think it is fair to say that I am not being paranoid here.  How long is it from the legalization of gay marriage to the banning of speech critical of the gay lifestyle?  (And, by the way, the Church always makes this distinction – the homosexual orientation is not of someone’s choosing, but the lifestyle is – it is the former that it considers a sin, not the latter). 

Those who cannot get beyond the view that all opposition is fueled by anti-gay bigotry, largely because they prefer the easy moral superiority afforded by not reading beyond the second paragraph, very naturally see a trade-off between freedom of speech and religion and tolerance of the gay lifestyle.  To them, there is clearly a downside to such freedoms in that their exercise by some is viewed as hurtful to others.  This concern for the offense that could be taken by the subjects of some criticism has already led to a great deal of restriction of speech abroad, especially with respect to criticisms of Islam (google Mark Steyn and Canadian Civil Right Commission, and you will be shocked to see how close such absurd censorship is to our border).  The American universities have long ago voluntarily squelched free speech, and have encouraged the lack of tolerance for freedom of speech by allowing students, in those rare cases where a conservative speaker is brought on campus, to shout them down without rebuke. 

With respect to the Church, there is a belief system in a benevolent God who calls us to love Him, and to show this love by walking in His way, which, while not always clear, is nevertheless knowledge that is available to us through reason and revelation.  Sin, a turning away from God, jeopardizes our ability to be joined with God in heaven.  The greatest commandment is to love God above all things, but this is quickly followed by loving your neighbor as yourself.  If you love God, you want to be with Him in heaven and no longer be estranged from Him on earth; and if you love your neighbor, you want the same for him, and indeed are called by God to look after your neighbor in this way.  Heaven is not a lifeboat that fits 20 people, where you are scrambling to get in before it fills up – part of how you get in is by pulling others there with you. 

Now, you may be of the belief that this is all hooey or hocus pocus.  Fine and good, that is your right.  But what is the person who subscribes to these beliefs supposed to do?  If you tell him he can never be critical of the gay lifestyle, you are telling him he can never try to help a gay brother onto the lifeboat lest he give offense.  That is a command he simply cannot abide.  I am not suggesting, and never would, that it become the law of the land that gay sex be illegal or otherwise punishable, or that incitements to violence against gays be permitted.  But telling something to someone that they don’t want to hear should never be a problem.  My eight year old, when told he cannot have this or that piece of candy, always responds with the accusation that I am mean.  So be it, he is permitted to have that opinion, but it is my responsibility as his father to see that he is not tripped out all day on a sugar high.  A Christian has that same type of responsibility, even though he knows some will think the lesser of him for making such opinions known. 

The Catholic Church, by the way, does not in any way single out gay sex as particularly sinful – it is considered no more sinful than marital heterosexual sex that is closed to children via contraception.  This places a very high standard on all persons, gay or straight.  Most of the world, and indeed most of the Catholics, fall short of this standard, a fact the Church well knows.  But the Church doesn’t exist as a business to win popularity, and people everywhere are free to take or leave it.  If I am offended by the Church’s stance against contraception, I nevertheless feel no compunction to shut them up about it already – I don’t have to hear about it if I choose not to. 

Wednesday, March 06, 2013

Good Enough for Government Work

Less than fifty percent of new start-up businesses last beyond five years before failure.  (  The reason: the new business fails to generate sufficient benefits for its customer base.  The successful business is successful if: 1) it recognizes an unmet need of consumers; and 2) it meets that need in an efficient way.  Failure occurs due to trying to enter a market that is already well served, or in failing to economize on delivery costs.  In 2010, 4.1 percent of the employed workforce lost their jobs due to business failure.  (  This number is historically low – trending down from 6.1 percent in 1977.  But the number is still rather startling – 4 out of every 100 people will lose their job this year because some new business owner has over-estimated the net benefits offered by his business to consumers.

The beauty of business failure is this – it is the ultimate cost-benefit test – and it doesn’t rely upon theoretical debates about its costs and benefits.  It is the job of the business owner to control his costs and to convince his potential customers that the benefits of the product or service he offers meets or exceeds the price - he cannot compel customers – he must convince them to spend their own money.   Fifty percent of new business owners, who lay money on the line, and subsequently a good deal of sweat, miscalculate the cost-benefit comparison and in the process lose a good amount of their own investment.

Now consider any given government program or agency.  What is the likelihood that it doesn’t also share the same 50 percent failure rate in terms of delivering benefits that exceed its costs?  In fact the likelihood is very low that it shares the same 50 percent failure rate – it is more likely a failure rate that goes well beyond 50 percent.  Why?  Because unlike a private business, which relies upon convincing each and every customer that the benefits exceed the costs, a government program is financed out of general tax revenues, its costs are hidden, its benefits are in many cases amorphous and a matter of debate, and there is no competitive pressure to deliver more with less over time.

There is the old line that it is not difficult to convince Paul to rob Peter to pay Paul, which refers to the political salability of redistribution in a democracy – if Pauls out number Peters 51-49, you’ve got yourself a winning policy.  Now the reality of course is that there is an administrative cost to robbing Peter and paying Paul – if we’ve stolen $100 from Peter, less than $100 will go to Paul.  How much less depends upon the administrative efficiency of the government.  Even if Peter agrees that he should be robbed to pay Paul, so that the idea of government redistribution is universally accepted, there is still the issue of the fiduciary duty of the government to both Peter and Paul to do so at minimal cost.  If it costs $10 to administer, this is surely worse than a $5 administration fee, as it reduces the amount that goes to Paul.  At some level of administrative fee, the program would also presumably lose the support of Peter.

Let’s say that the Peters actually outnumber the Pauls, but enough of them still vote to tax themselves (and other recalcitrant Peters) to pay the Pauls.  Will administrative excess ever get to the point where Peter pulls back?  Probably not, for various reasons.  One, Peter doesn’t pay a different tax for each different government program – the same taxes go toward the military, law enforcement, the courts, and welfare, so while he may express dissatisfaction with the inefficiency of this or that agency, he views it as a bundle, and may be satisfied with the aggregate bundle even if he knows he is getting screwed on this or that item.  Two, he has very little visibility to the inefficiency of any given agency, and efforts to learn about it are more likely to just add to his frustration, as he has little ability to do anything about it.  Three, ultimately the admin costs may only be pennies – more pennies than are necessary – but still not worth bothering with at the end of the day.  And because it is only pennies, our old friend “Expressive Voting” comes into play – although Peter may oppose a policy because he knows the costs exceed the benefits, his relative powerlessness as one vote among 200 million leads him to espouse favor on the policy so as to be perceived as being compassionate. 

All of which brings me to the sequester, which requires all of a 2 percent cut to the current budget, which is itself an increase over the prior year’s budget.  If you don't bemoan the potential loss of jobs caused by the sequester, you're a heartless conservative who wants to starve children.  It is a problem that the cuts are more or less indiscriminate across agencies – surely there would be a better way to allocate the same cost reductions – but this is not to say that the aggregate bundle of cuts would not be hugely beneficial to the American taxpayer. (i.e. the costs to the taxpayers vastly exceed the benefits).  It is already a well established fact that federal government employees are paid more than comparable workers in the private sector.  (  Workforce reductions in government, as rare as they may be, more often than not occur due to attrition rather than layoffs – it is very hard to get fired from a government job.  If the private sector find that 4 percent of its workforce is simply not cutting the mustard each year (and this figure is due only to business failure, not inclusive of firings for lousy performance), is it at all likely that the number in government is zero? 

In my work, I get to see a lot of contracts between businesses for the delivery of products or services, and these contracts almost invariably require productivity improvements over the life of the contract, delivered as price reductions to the customer.  While it is certainly true that a vendor or service provider who performs well under a contract can expand its business with its customers, it cannot generally raise its price for delivering the same product or service (the one exception is in cases where the product being delivered has a cost that is affected by commodity prices – but even here, there is a formula for pricing that allows for increases due to underlying commodities but which still builds in an expectation of productivity improvements).  Every mature business, after experiencing a growth period where it is scrambling to meet growing demand, and is therefore more afraid of austerity measures than it is of wasteful costs, eventually sees its demand stabilize, at which point in time it starts to trim the fat.  This most recent recession, it is often noted, has been marked by good growth in labor productivity – i.e. companies have laid off the fat without losing output.

This suggests two possibilities – 1) the same exact services provided by government bureaucrats could be provided with a 5 percent reduction to their numbers, as efficiency gains should allow for such reductions to the workforce; or 2) five percent of the services performed by these agencies have costs that exceed the benefits they deliver, and should be eliminated or scaled back in some way; or 3) the same exact services could be provided with a 5 percent reduction to the compensation of the government employees.  We already know that 4 percent of the entire workforce (which is a higher percentage of the private sector workforce) loses their jobs as a result of not delivering sufficient value.  We know two things from the private sector – 1) the company that fails to achieve these types of productivity gains will lose business, ultimately fail, and every person in the organization will lose his job; and 2) the same level of employee, even without the same job security offered by government, is willing to work for less.  If a government agency were to take the first approach, and were to fail in delivering the same “output,” this would clearly be an indication of its lack of efficiency.

The labor market in government is a real problem.  It is hampered by the lack of ability to objectively measure the performance of an agency and the lack of competition forcing the agency to improve its efficiency over time.  It is only due to the lack of competition that it is able to get paid more than private sector counterparts for doing less, with almost no risk of being laid off.  I know and respect many government workers, so this is not a critique of all government workers – many are very capable and hard working people.  But as a group they are overpaid. 

Lord knows there is plenty of dead wood in the private sector, but this is not an argument for letting it persist in government.  Ultimately, the deadwood in the private sector is on borrowed time – especially the white collar dead wood.  I never really have any sympathy for a white collar worker who is part of a workforce reduction (as opposed to those who lose their job because the business fails).  There are plenty of people who feel entitled to a job and a good salary due to various reasons unconnected to their work performance, and many of them are permitted to float along without adding value by managers who prefer not to deal with the mess of firing someone until they are told they have to.  But the market often imposes the discipline that leads to ownership putting the boot to these people.  And when it doesn’t, such inefficiency is at least partially constrained by competition.  To the extent that it is not, that there is always some dead wood, it is a cost born by both consumers and the business owners, but no consumer is compelled to pay for it.  Not so with a taxpayer and his government – there is no market discipline, the excessive costs are borne by the taxpayer alone, and he has no choice in the matter.

As an illustration of the problem, I am aware of one government agency that not too long ago posted openings for economists, and had something on the order of 100 applicants per opening.  Admittedly, not all of these applicants were likely qualified, but let’s be conservative and say that only 40 such applicants were qualified.  Let’s also concede that they may have been applying for other open positions which they may get and choose over the government role.  So now maybe we have only 10 people qualified and available at the end of the day to take each position.  If I see that in the private sector, my first reaction is that I am offering too much money, and I scale back the salary so that the demand for the job is equal to the supply.  I probably do not go to my existing employees at the same level and give them a pay cut, but this is due only to my goodwill – the fact that there are multiple people lining up for the job at a lower salary indicates I can safely fire my overpaid employee and replace him with someone equally qualified.  If you were selling your house, and posted a price that drew in 100 contracts meeting that price, you would inform everyone that they are competing with 99 other contracts, and give them all one last chance to bid.  If you had a real estate agent who randomly accepted one such offer and didn’t ask them to re-bid, you would rightly consider yourself ripped off by your agent.  The same holds true when the government draws 100 applicants per opening and doesn’t lower the offering salary.

How big is the problem?  Federal salaries to civilian employees (i.e. excluding military) were $271 billion in 2011, compared to $3,539 billion for the total federal budget in 2011.   (I don’t mean to exclude the military under the assumption that they are paid correctly, I just couldn’t find the stat inclusive of military salaries.)  This amounts to slightly over 7 percent of the federal budget, not necessarily large in the scheme of things, but shaving $27 billion (10 percent) off of it should be entirely possible without losing much if any benefits, and certainly it is not likely we would lose benefits in excess of $27 billion.  Bottom line – we are probably eliminating jobs that would never survive in the private sector, where no one is willing to pay prices to justify them.  When the taxpayer is put on the hook for such expenses, it is pure theft.  It may be pennies in the ultimate scheme of things, but this just makes it sophisticated theft (per Office Space, it is much smarter to steal pennies at a time across a base of millions of people or transactions, rather than trying to steal $1 million off of one person or one transaction). 

But why limit this discussion to federal government salaries?  If you extend this to state and local government, you are probably talking about real money.  So much of the federal budget is transfer payments unconnected to salaried employees, but especially at the local level, we are primarily talking about salaries for teachers, police, firefighters, etc.  The same labor market problems exist here, except they are limited to some extent by the ability to move to a different town that is more efficient in its provision.  When the flap over teacher’s collective bargaining rights in Wisconsin took place, I had remarked that the fact that there was no shortage of teachers in Wisconsin probably indicated that they were, on average, overpaid as a group.  If I had the power, I would cut their salaries 5 percent across the board, and see if a shortage arose; absent a shortage, rinse and repeat until you see one, and then increase as necessary so that there is no excess supply of teachers.  (It’s a little more complicated than this, as there are no doubt individual teachers who are underpaid relative to their abilities, which is the fault of their unions.  These might be the ones most likely to walk due to a salary reduction, but the point remains that if you could eliminate the union you could lower the average pay and still retain the best teachers). 

As an aside, there is nothing that bugs me more than people whining that such and such a profession deserves to be paid more than it is, because those professions most prone to such whining are the ones most likely to be overpaid.  Teachers are the best case in point.  If you think you are underpaid, leave and find another job, otherwise shut up.  It’s a noble profession, true.  But there is an ample supply of noble people who would do it for less.  (In fact, there are about a gazillion hours that go into voluntarily teaching kids to play various sports – not reading or writing, granted, but not entirely devoid of value).  The only way to maintain premium salaries in such a profession is to limit the ability of would be teachers to compete against each other for available jobs.  This is done by erecting bogus barriers to entry (education degrees), and by unionizing to restrict the ability of local governments to contract directly with individual teachers on mutually agreeable terms.  I know of a guy who has a law degree from Yale, experience in investment banking, significant experience as a youth wrestling coach after competing as a Division 1 wrestler, who has to jump through certain hoops in order to get a job teaching high school in Texas, one of the most conservative states.  Now, he may be a better teacher for going through these hoops (though he may not), but there are plenty of people who have probably jumped through these hoops who are known to still be lousy teachers. 

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