Friday, November 07, 2008

Let Me Eat Cake

Responding to some comments today:

1) The left wanted the surge to fail: interesting statement, When in fact we BOUGHT peace. The surge is only a tiny reason there is less violence. Yes John, it was YOUR taxes and mine that bought the peace. THANK YOU FOR THE DONATION. So, I think it makes sense that you back an ideology that wants us there indefinitely. Its the only way to buy the peace. The surge didn't work, your cash and mine did.

Fair enough, let me alter my statement and say that the left did not want to buy peace; how this is logically different from losing is lost on me. Of course Peace is always bought - we still have troops in Germany, Korea, Bosnia. What the hell was the Marshall Plan other than a recognition that the Treaty of Versailles that ended WWI was so punitive to the losers that it set the stage for WWII?- we won the war there but failed to buy the Peace, which eventually came at a much higher price. The very existence of a military (or the police for that matter) is buying Peace - it doesn't naturally occur. Peace bores the living tears out of many people, and unless deterred they'd rather smack someone around.

Also, I think to be fair my statement was that some on the left wanted it to fail; not all. And this is very different from opposing it prior to it being enacted. It is certainly defensible to say that, despite the potential consequences, it will be too costly to the U.S., and therefore I am against it. But once it is the chosen course of the country, wouldn't patriotism demand that you wish it to succeed? Maybe it doesn't, I don't know, but in my post I said as much in favor of Obama, saying that I may disagree on some foreign policy moves but I hope he gets lucky. It is hard to deny that there were a lot of people who were hoping George Bush wouldn't get lucky.

Oh, and thanks for thanking me for the donation. It is rare to hear that.

2) On Redistribution, well, you know that it is just bull. You know that john. You may not want to acknowledge the level of Corporate Socialism of the last 8 years, including your lovely war in Iraq and the countless $billions that have gone to special interests in its name. But what's worse, and you know this too, is that any income growth in the last 8 years has gone primarily to the wealthiest 1% of this country (I'm willing to bet that you're in that category, and congratulations). So don't play the whiner on redistribution.

You are confusing income and wealth. In 2000, my wealth amounted to less than $100 thousand, most of which was increased equity in my house courtesy of the housing boom. At that time, I was nowhere near the top 1 percent; I think I barely made it into the top 20% at the age of 32 with a Ph.D. in a generally very lucrative field. So at the time I had very little wealth and an income that was probably below average given my education and age; eight years later my situation has changed for the better, which is the long way of saying that the composition of who is in the top 1 percent of income earners changes over time - people pop in and out. Income mobility speaks to the level of opportunity in this country, which is a fact that is often ignored.

Moreover, this is not a trend that started on January 20, 2001; it stretches back to before the Clinton administration, and reflects demographic changes in the pattern of marriage as much as anything else. In the old days, a young guy on the make married his secretary, but nowadays he marries his law school colleague. Until he gets elected to Congress, she gets a little old, and he drops her for an intern. But that is besides the point - while he stays married to her they get the double high income. There are other factors, such as the pattern of immigration and how that effects supply of low versus high-skilled workers in the U.S.

But aside from the facts, I still find myself asking so what? For the first six years of the Clinton years I was scraping by in grad school, not because of anything related to the Clinton policies, but because I chose to, and I never sat there thinking that someone should be handing me something. If income inequality was increasing, I didn't chalk it up to some conspiracy that precluded me earning more, and therefore required some redress. The free market for labor is as far from a conspiracy as you can get. I would never look to a friend making a lot of money and say that he should hand some of it over to me (although I did graciously accept many beers - pride goeth before sobriety).

Which leads to my larger point - the distribution of income is largely the result of the free choices of individuals with respect to what careers they pursue, what risks they take, what products and services they offer, etc. If they equip themselves with skills that please a lot of people, they make a lot of money through free exchange. The distribution of income stems from freedom; redressing that with government restricts freedom, distorts incentives and encourages unproductive rent-seeking, requires coercion, and is far more likely to redistribute the goodies in a way that serves those who get to decide on the redistribution as opposed to those porportedly served by it. Liberals like everything about freedom except its consequences.

Why, just the other day I was pondering on my 40 foot yatch the fact that most rich people are very generous, and rarely spend lavishly on themselves. I lit up my Cuban with a $5 bill, and reflected on the money that Bill Gates has made, or that Warren Buffett has made, and further on the fact that both of them plan to give away most all of it. After my servant topped off my martini, I remarked to him that it is my considered opinion that Msrs. Gates and Buffett will probably give it away to some panty-waste charity that I myself wouldn't support, but I would never argue that I have a right to decide what charities they should support. As the boat pulled into dock I was admiring my brand new lamborgini parked nearby as I thought further: even if I would support other charities, my bet would be that the charities Gates and Buffett do give to are held much more to account for the results as compared to the recipients of government largesse. So uniquivocally I can say that the fact these guys have accumulated such wealth is a good thing - better for freedom, and probably better for social causes, as opposed to what would have occurred had their wealth gone to government as taxes. My driver agreed. If he hadn't, I would have canned his ass.

3) Universal Health Care (which I am not a fan of) is not nationalization of health care. That's funny, given your background in economics. There is nothing in the Obama plan about nationalization of an industry. It is the wrong plan, but it isn't nationalization, as you incorrectly assert.

You got me here on the facts - as a result, your subscription fees for the year have been waived. Other factual errors on my part over the years have virtually abolished subscription fees, which as you can understand has resulted in massive cutbacks on resources available for fact checking. It is a vicious circle. I meant only to say that he will be subsidizing a larger portion of the population, which implies further government commitments, which we cannot currently meet anyway. The point was only to say - don't count on it; even if passed something eventually has to give. The problem is that those who do count on it and alter their behavior as a result will probably be hurting down the road.

Also, I did say that Bush exacerbated the structural deficit, did I not? In other posts, I criticized the silly populist rhetoric of the Republican ticket. I think the Republicans spent like drunken sailors, although that is probably an insult to drunken sailors. I just think it's going to get worse; I could be wrong.

I am saddened by your ... adherence to fear and demonetization of alternative views, and unwillingness to acknowledge the failures of the last 8 years as a representation of the big government Republican ideology you so clearly endorse.

I know you meant to say demonize rather than demonetize, but any suggestions on how I might demonetize my future tax liabilities would be highly welcomed. As for fear, this is one accusation that always kind of irks me, not because it's not true, but because it cuts both ways. 1) LBJ aired a commercial with a atomic mushroom cloud when running against Goldwater; 2) After Reagan was elected, I distinctly remember the "Day After" as a major TV event meant to scare my 12 year old imagination over the inevitability of nuclear war as a result of electing him; 3) In the 2004 election, the NAACP ran a rather disgusting ad with the daughter of a black man dragged behind a truck to his death by a couple of white guys, with the message being - when Bush failed to support hate crimes legislation in Texas, it was like her father was being dragged to death again; the guilty parties got the death penalty in Texas, presumably against the protests of enlightened opinion; and 4) the world is headed for cataclysmic global warming problems that will lead to famine, death, etc., and we can stop it if not for Republicans. I don't doubt the sincerity of those who believe global warming is going to cook our goose - that fear, and others, may be justified, or even if not rational, sincerely held. It is not necessarily a cynical plot, and therefore it is not a priori an attempted manipulation of the electorate to advertise your own fears.

Wednesday, November 05, 2008

Serenity Now

All right, well, it is what it is. That's democracy for you.

Much to the chagrin of the people who are currently drinking the kool-aid, the world still is what it is, and despite what "change" will look like here, there is no fundamental change in the disposition of our enemies (although there will be in their strategy), nor more importantly in fundamental human nature. And fundamental human nature doesn't favor the long-term viability of the nanny state envisioned by the government headed our way.

That said, luck has a lot to do with life, and this is no less true in politics. Obama could make all the wrong moves and the country could still get lucky, and we should prefer that to bad times that prove out our theories. That is what loyalty to your country demands, no matter who is President, and the fact that I think it has been woefully lacking on the part of the Left over the last 8 years is no reason to be guilty of this ourselves. There are many who actively wanted the surge to fail because they wanted their opinions to be vindicated rather than their country to succeed. It's not exactly justice that their candidate won, but again, it is what it is.

I hope to post on a host of issues over the next few weeks, but let me start with an observation on the likely extension of the welfare state to healthcare, more redistribution, etc. It simply will not work. It already isn't. And in fact it really isn't working anywhere in the world. People who complain about the current budget deficit seem to ignore the structural deficit, which is a comparison of what our future obligations under the various entitlement programs (Social Security and Medicare) compare to the likely tax receipts in the coming years. In the old days, your social security was your kids - you tended to have a lot of them, you invested heavily in raising them, and they took care of you in your old age. If you couldn't have kids, you realized you had to squirrel away some savings to provide for yourself, and this was feasible because you saved a lot of money not raising kids. Enter Social Security and Medicare. Suddenly the burden of providing for you in your old age is shifted from you or your kids to other people's kids. This reduces your own incentive to save for retirement, as well as your ability to do so given the incremental taxes.

It also, tellingly, reduces your incentive to have kids, and most every nation that has significant social security benefits has long ago stopped having them. The U.S. is almost alone among the developed world to still management a replacement birth rate, but we still face the expectation of steep growth in our tax burden to support the current promises of social security and medicare. We face this for two reasons - one, our birth rate has nevertheless fallen, so that the ratio of people in the working generation to those in the Baby boomer generation is much less than it has been in the past; fewer workers to support the same obligations implies the need to somehow extract more and more of their income. Second, people are living longer, implying the obligation per retired person is growing. When social security was first implemented, the average lifespan fell 2 years short of when you were able to collect. Now it goes about 15 years beyond and growing.

Even if we assume current economic growth rates (which are no doubt effected by marginal tax rates) can be sustained in the face of increased taxes, the tax increases necessary to close the structural defecit are way beyond what any politician would ever in his wildest redistributionist dreams suggest. And even if he did and managed to pass them, there would likely be devastating effects on growth, implying the tax revenues would still fall short. So there is really no getting around this fact - the nanny state cannot be sustained. Eventually it will crumble, and those who somehow relied upon the promises of the state and failed to account for the fact that it cannot fulfill its obligations will be most affected.

Now, the structural deficit is not of Obama's making, and in fact Bush in one way exacerbated it, although he also tried to address it and was basically stymied by a Congress which is best served by preserving the lie that we can fulfill these obligations as currently constructed. But Obama will nevertheless make it worse to the extent that any of the things he's talked about - nationalized healthcare, etc., are institutionalized. He basically wants to double down on a pair of 2s. So don't kid yourself that he is ushering in a country that will, for the first time, care for its sick and poor.

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