Supply-Side Deficits, Again
Reihan Salam has pulled some stuff from an old New Yorker piece detailing some of the big personalities in the rise of supply-side economics. There’s a lot of good stuff here, but it’s interesting to note how it meshes with what I was saying the other day about supply-side and deficit reduction:
It’s worth noting that Ronald Reagan was very resistant to making extravagant claims regarding the impact of tax cuts on revenues, much to the frustration of the supply-siders. He favored reducing taxes that discouraged individual initiative, yet he was not a supporter of reducing taxes in any and all circumstances. Reagan and his closest advisors were also very cautious about arguing that tax cuts would raise revenue — in many instances, the team was more inclined to argue that the revenue decreases would be less than what we’d see under static analysis, which is about right.
Reihan also noted that Reagan thought the country would have to go through two or three years of “suffering” to “pay for this binge we’ve been on”. He also quotes Robert Mundell, an economist regarded as one of the pioneers of supply-side, as advocating limited compassion, “the virtues of Keynesian economics in a downturn”, and as saying “the idea you should always cut taxes is absurd”.
It’s always worth remembering, again, that Reagan had a Democratic Congress, so laying all of the blame for the deficits of the 80s at his feet is an exercise in inaccuracy, but let’s just look at this in a vacuum one more time. I said before that I didn’t believe supply-side economics was designed as a theory that would reduce deficits because of tax cuts — although I admitted that I didn’t really know — and these stray quotations, although not comprehensive, seem to confirm that. Supply-side economics isn’t a “failure” because deficits didn’t go down during the last thirty years. Political interests simply got in the way of economic ones, as is so often the case. Let’s not be so quick to forsake entire economic theories because of the mistaken words of a few uninformed Republican senators.
All On Black
Final remarks have been made in The Economist’s online debate on legalizing gambling, and if you’ve read what I’ve had to say about it previously, then you won’t be surprised by my being unimpressed with the “opposition’s closing remarks”. If you’ve been following the debate, then you’ve already read these latest remarks from Leslie Bernal, as he repeats himself constantly in this round and doesn’t even address Balko’s arguments from the second round. Balko does have an excellent response to Bernal’s “freedom from addiction argument”, which is unsurprisingly similar to my own view on the matter:
It’s one thing for gambling opponents to argue that negative external effects caused by addiction are harmful enough that giving government the power to limit the individual freedom to wager is justified. I don’t agree, but it is at least a reasonable argument. In his rebuttal, Les Bernal stakes a much more absurd, downright Orwellian position: Banning commercial gambling would expand our freedom.
“But the business model for casinos and lotteries only works if our government takes away the freedom of millions of Americans,” Bernal writes. “By definition, someone who is an addict or someone who is in deep financial debt is not free.”
Well, no. Someone who has become an addict or is in deep financial debt due to gambling is suffering the consequences his decisions. No one forced him to make those decisions. He’s no different than someone in debt from living a lifestyle beyond his means, or from speculating in high-risk real estate. You are free to walk out of a casino at any time. Scores of people do it every day, shirts still on their backs and savings intact.
Mr Bernal knows it would be unpopular to argue against personal freedom. So he’s trying to change its definition. In Mr Bernal’s world, freedom means having the government take bad decisions away from you. To borrow from (and slightly bastardise) a song by the great Kris Kristofferson, for Mr Bernal, freedom’s just another word for nothing left to choose.
Balko also addressed Bernal’s “social costs” argument, not quite as deeply as I did, but in a similar fashion: Read more…
When Is It Appropriate to Filibuster?
You’ve probably heard by now that the DISCLOSE Act didn’t make it through the Senate because of a Republican filibuster. While I find myself rather agnostic on the bill in question — oh my gosh, not money in politics! — I actually don’t have a real problem with the chorus of liberal voices maligning the filibuster as the end of democracy as we know it. But first, let’s just address this comment from Michael Tomasky criticizing Olympia Snowe for saying that the bill would have benefited Democrats more than her own party:
She is undoubtedly correct in that the court’s decision – maybe not so much this election cycle, but 2012 and all subsequent ones – will overwhelming benefit Republicans. But she’s starting to cry wolf a little on this slow-down business. This was her same reason for voting against healthcare reform, which took nearly a year (and which she’d supported in committee).
That’s the Supreme Court’s Citizens United decision, in case you’ve been living on Socotra Island, which prevents the feds from capping the amount of money private donors can give to political campaigns. Presumably, the ruling will “overwhelming[ly]” benefit the GOP because those damnable corporations can now give however much money they desire to Republicans candidates, and we all know that for corporations, Republicans good and Democrats bad! Of course, we could always pull out the data, which says that those evil corporations donated more money to 44 than they did to John McCain and that organized labor has taken advantage of the ruling’s implications more so than any private company so far. But let’s not bother with the facts.
Anyway, the reason I bring up Tomasky’s piece is because I like the James Madison quotation that he cites at the end of it. According to the guy who basically wrote the Constitution:
In all cases where justice or the general good might require new laws to be passed, or active measures to be pursued, the fundamental principle of free government would be reversed. It would be no longer the majority that would rule; the power would be transferred to the minority.
So Madison opposed supermajority requirements except in extraordinary cases such as treaty approval and the deposing of members. Never mind that the filibuster was an accident in the first place. Read more…
I came across this nugget the other day. Vanderbilt has new rules governing where you can and can’t smoke on campus:
There will be fewer places to smoke on campus starting Aug. 1 when a new smoking policy for the university will take effect. Smoking on the academic campus will now be limited to outdoor sites that will have signs that read “designated smoking area” and cigarette urns for disposal.
While smoking is not permitted in any university building, there were previously no restrictions on smoking outside on the academic campus. Under the new policy, smoking is now prohibited outside except in the designated smoking areas. The new policy is a change for the academic campus only. Smoking is already limited on the medical center campus to outdoor locations along that campus’ perimeter.
Ha ha ha ha ha. Having laughed about this, fumed about it, and looked at this from several angles, I’ve concluded that it’s a simple recruiting pitch.
Firstly, exactly whom is benefiting from the rule? Secondhand smoke isn’t a problem outside unless you happen to be hanging out in a small, windless area where there’s a whole bunch of people smoking cigarettes. Does that sound like a “designated smoking area” to you? Has Vanderbilt just created the problem of outdoor secondhand smoke?
Secondly, just how in the hell do they plan on enforcing this? Presumably, the cops are going to be the guys that tell you to put out your cigarette if you’re not in a DSA. If you take a glance at the map, however, you’ll notice that not one single fraternity house is a DSA. Are the cops going to go through a party on Friday night and ticket every single person who’s smoking a cigarette at the frat house? College campuses aren’t office buildings — there are a lot of events that feature large crowds, and running a bunch of police officers through parties in order to crack down on cigarette smoking isn’t a very good sell for your institution of higher learning. Read more…
Talk About Misused Resources
Ezra Klein has some interesting graphs from CBO. What am I supposed to notice about these items, Ezra?
The main thing you’ll notice is that highly educated native-born women are employed at much higher rates than immigrants, while native-born men are employed at slightly lower rates at almost every education level.
I disagree. I’d say the main thing I notice about these graphs is the fact that the percentage of people sans high-school education who are employed is twice that among folks from Mexico and Central America as it is among native-born workers. I’d also notice that it’s about 50% higher for those who have been to high school but have no diploma and that it’s about 20% even for those who do have high-school diplomas. But is wage reduction really an issue here? How about competition in job-seeking for the less-educated among us? What about the payroll taxes that these migrants and their unemployed counterparts aren’t paying? Naaaaaaaah.
Picks of the Day
How do you push on a fractional over-under? Why, your starting pitcher gets scratched because of slight discomfort with the snugness of his jock:
- Phillies (-300) v. D-backs
- White Sox (-168) v. M’s
- Over 7 ½ (-110) in Natrals v. Braves
- Under 8 (-110) in Giants v. Marlins
Froggy:
- Over 8 ½ (-120) in Angels v. Red Sox
- Padres (-106) v. Dodgers
Yesterday: 2-3 (0-1)
Color Me Puzzled
Friedersdorf flags Mark Levin’s strange criticism of Ross Douthat’s Monday column dealing with climate change. What’s weird is that Levin doesn’t disparage the column so much as he disparages Douthat’s very existence as a writer:
This is your typical pretender. He’s not a thinker. He’s not a scholar. He’s not accomplished. What, exactly, does he know about climate in specific or science generally? What has he studied on these subjects? He doesn’t tell us. He neither presents evidence to justify what he says nor says anything interesting let alone compelling. Douthat is illustrative of a desperate climber trying to claw his way to the top. And he is encouraged on his journey by other obscure light-weights who clap like trained seals for they share in his delusion. But he damns himself with his regular ramblings in the New York Times — he, a failed author to boot. Thoughts?
I’m not sure I can count on one hand how many levels on which this is weird. Levin writes about Douthat’s column as though it were some kind of treatise on how climate change’s existence has been perverted by the American Right. There are, in fact, exactly three sentences in the 1000-word column that rebuke conservatives for effectively shrugging off climate change. The rest of the piece basically justifies conservative skepticism in terms of its approach to global warming and tacitly rejoices the death of Harry Reid’s climate bill. It’s not about whether or not climate change indeed real, and whether or not it’s interesting is obviously a matter of personal preference.
So what does Levin find so objectionable about it? I guess it’s because he’s exceedingly opposed to Douthat’s being given a position at a “dishonorable, liberal media outlet” from which he apparently “influence[s] the conservative movement”. Presumably, he disapproves of that position not belonging to somebody more aligned with mainstream conservative ideology (yes, this happens frequently). And this leads him to… attack Douthat as a “pretender”, a “desperate climber”, a “light-weight”, and a “failed author”. All because Douthat wrote a column that opposes cap-and-trade. Read more…
Supply-Side and Deficit Reduction
There’s been a meme going around recently arguing that supply-side economics was an abject failure, to use the popular colloquialism of today’s current affairs pundits. These claims of failure, however, aren’t based in any suggestions that supply-side economics depressed employment, decreased GDP, or killed our trade-surplus, but rather that it exasperated peacetime deficits by allowing Republicans to basically ignore them. Martin Wolf has a post up on his FT blog that’s been getting a lot of attention for exposing the political opportunism allegedly inherent in the support of supply-side economics:
To understand modern Republican thinking on fiscal policy, we need to go back to perhaps the most politically brilliant (albeit economically unconvincing) idea in the history of fiscal policy: “supply-side economics”. Supply-side economics liberated conservatives from any need to insist on fiscal rectitude and balanced budgets. Supply-side economics said that one could cut taxes and balance budgets, because incentive effects would generate new activity and so higher revenue.
The political genius of this idea is evident. Supply-side economics transformed Republicans from a minority party into a majority party. It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch?
He then outlines what he believes the step-by-step (political process) was for politically expedient policy-makers:
How did supply-side economics bring these benefits? First, it allowed conservatives to ignore deficits. They could argue that, whatever the impact of the tax cuts in the short run, they would bring the budget back into balance, in the longer run. Second, the theory gave an economic justification – the argument from incentives – for lowering taxes on politically important supporters. Finally, if deficits did not, in fact, disappear, conservatives could fall back on the “starve the beast” theory: deficits would create a fiscal crisis that would force the government to cut spending and even destroy the hated welfare state.
Fair enough, but I have a beef with this line of reasoning. Just because you lost a bunch of games 10-9 after you adopted sabermetric analysis on the offensive side of your baseball strategy doesn’t mean that sabermetrics is wrong. It just means you forgot about/were unwilling to do anything about your pitching. Read more…
Picks of the Day
There were only ten games yesterday, so I lay fallow:
- Yankees (-240) at Indians
- Cardinals (-144) at Mets
- Phillies (-235) v. D-backs
- White Sox (-245) v. M’s
For the froggy:
- Under 6 ½ (-110) in Natrals v. Braves
- Under 6 (-110) in Giants v. Marlins
Sunday: 3-3 (0-2)
Week: 21-14 (8-4)
Year: 102-85 (30-28)
What You Should Remember About the WikiLeaks Story
At the end of the day, the WikiLeaks papers will change few opinions. Those who want us out of Afghanistan will cite them ad nauseum; those who recognize the stakes for what they are — the need to preclude that country from once again serving as a breeding ground for al Qaeda and their copycats — will give them short shrift. What matters more is whether General Petraeus can affect the turnaround that made him a war hero in Iraq. If he does, the WikiLeaks papers will make good grist for historians’ footnotes, and nothing more.
This is the reason everybody needs to be sober about this right now. If we’re to remember anything about this, it ought to be that, as the NYT reporters conclude, “Over all, the documents do not contradict official accounts of the war.” It’s going to be quite sickening in the coming months to see reporters and pundits cite WikiLeaks as a good reason to get out of Afghanistan — that the spin the White House and the feds are putting on the war effort is somehow affecting public opinion towards AfPak more than daily news reporters detailing the massive obstacles we’re going to have to overcome in order to succeed over there the way we want to do.
And it really boils down to a matter of sloth and repetition: I’m sure that rational commentators as well as pro-war pundits are going to grow quite weary of having to explain over and over again that this particular WikiLeaks gusher (as Peter Fearver aptly re-dubs it) isn’t a bombshell and that it’s not a good reason to pick our toys up and go home. Unfortunately, 1000-word journalism has a way of incorporating shaky evidence in order to meet a space quota, and doubtless this story will find a way to seep into the public’s conscious as a reason to oppose the use of military force in Afghanistan. And it will be a mistake.
noot's observatory 
