Tuesday, May 8, 2012

David Brooks' False Choice

We all know that New York Times columnist David Brooks has a propensity for patting himself on the back.  You've seen him on Meet the Press being the last standing "adult" of the Republican party.  But sometimes this indulgence leads to misguided columns like the one he penned yesterday.

You see Mr. Brooks sees two completely different debates going on about economic policy.  On the one side, lefties that think this is entirely a demand problem and if the government would only spend more, which would require more deficit spending, then we could get this economy restarted.  On the other side, in a number Mr. Brooks believes includes "some on the left but mostly in the center and on the right,"  (Conveniently, Mr. Brooks declares "I'm one of them.") are people who believe the issue with the economy is structural and that we should be working to fix those structural issues instead of "papering over them with more debt."

In Mr. Brooks attempt to be the adult again, he's presented us with a false choice.  Paul Krugman, perhaps the most high-profile Keynesian on the planet, has been saying that this is a demand problem for a long time.  But he also hasn't denied that issues of government debt aren't a concern, they just aren't a concern right now.  He points to the continually low interest rates on U.S. government bonds throughout the recession as proof, and he's absolutely right.

Right now, today, the issue is demand and the government can take up some of the slack in that demand.  Further out, there are debt issues we need to resolve, and we need to set ourselves on a path to fiscal solvency, but we don't need austerity right now.  We need to do both, but the hair-on-fire invocations that DC will erupt like Athens are overdone and at the moment just plain wrong.

Somewhat ironically, Brooks admits the false dichotomy later when he says "Running up huge deficits without fixing the underlying structure will not restore growth. "  I haven't heard any Keynesian suggest that any of that statement is incorrect so why does Mr. Brooks find it necessary to divide the debate along this line?

And then there's the "structural" challenges Mr. Brooks cite which includes, "globalization and technological change" and "the decline in human capital."  I wouldn't disagree that all of those are issues, but to later say "Mitt Romney and Representative Paul Ryan understand the size of the structural problems, but their reform plans are constrained by the Republican Party’s single-minded devotion to tax cuts."  Funny that Rep. Ryan's budget and Gov. Romney's policies would seek to undermine government funding of education and national investment in science and technology.  It makes any contention that they "understand...the structural problems" sound a bit ludicrous given the goal posts Mr. Brooks has laid down.

And then there's the comment that, "the current model, in which we try to compensate for structural economic weakness with tax cuts and an unsustainable welfare state, simply cannot last." Lest we forget that Mr. Brooks earlier included "the right" in the number of people who want to solve the structural problems despite their dogged and unrelenting advocacy for tax cuts upon tax cuts, but it's "the left" that's having the wrong debate.

On the whole, this is the column you expect Mr. Brooks to write.  He's attempting to be the adult. He's implicating Republicans, while exonerating the right.  He's lauding solutions that fail to address the problems he lays out.  He's giving us a false choice and dressing it up in the trope of small government.  It's an alluring argument and it prays on "us vs. them" but it fails the sniff test.

We can and need to do both.  While the rates are good the government should double down in the sort of infrastructure investment that will propel the nation's economy forward.  The government needs to better fund higher education, research, and basic science.  And the government needs to address the long-term fiscal issues we are facing, even if the day of reckoning is some time off (and it is).  I'm disappointed that Mr. Brooks doesn't feel like we can do both.


15 comments:

Colin said...

OK I'll bite, why does the federal government need to fund higher education? How is this a public good? Furthermore, is it a coincidence that higher education -- the education sector that government is least involved in -- is also the one that performs the best?

As for the thrust of your/Krugman's argument that all we need is more demand, to be met by higher government spending, how many times do we have to do this before admitting it's a failed approach? We keep doing this, it keeps failing, and the Keynesians invariably respond that it just wasn't big enough. In contrast, do a quick google search for the unemployment rates of Latvia and Estonia -- countries that opted for deep cuts in government spending in recent years -- and take a look at their unemployment trends.

I've also noticed that while everyone seems to agree that we need to embrace fiscal responsibility, it's never quite the right time to start such a program. Fiscal responsibility is something the government always vows to do tomorrow, but the tomorrow never quite seems to arrive -- funny that. It almost seems like yesterday that candidate Obama was vowing to enact a net spending cut before doing a 180 and passing a massive stimulus bill.

"Lord, grant me spending cuts and debt reduction, but not yet" appears to be the prayer of politicians throughout Washington.

Jason said...

I'd argue higher education impacts the ability of our citizens to compete in the global marketplace and the quality and accessibility of that education can determine the competitiveness of our nation. Certainly by talking about human capital that's what Mr. Brooks is addressing.

More broadly I would simply suggest a more educated citizenry is a public good.

We could also look at the UK that has implemented austerity to the point of a second recession.

Government spending isn't always the solution, but it also isn't always the problem. The U.S. government was able and may still be able to borrow money at a rate below inflation. Why is it a bad idea to borrow that money, at a time when construction was hard hit by the housing bubble bursting, to build roads, rail, high speed internet, any number of things that would set up the business investment of tomorrow?

And Colin, I share your disappointment when during the debt ceiling debate President Obama and Speaker Boehner seemed to come to a compromise that would have raised $1 of revenue for every $3 in spending cuts to help right our fiscal ship only to have the idea scuttled by Rep. Cantor and a cadre of extreme right Congresspeople.

Colin said...

Not sure I follow. If we take a bunch of guys that decided they wanted to be electricians and instead sent them to college to be Women's Studies majors, our economy is more competitive? If higher education is worthwhile, won't its value be signaled through higher pay, and thus people will be incentivized to do it anyway? Further, given that fewer than 60% of college students graduate within six years, isn't the more logical conclusion that we are *over*-spending in this area and could do with fewer people attending institutions of higher learning?

More broadly I would simply suggest a more educated citizenry is a public good.

Really? How does it meet the definition? And again, I can readily think of examples where a less educated population would be preferable, as a gainfully employed tradesman strikes me as better than an unemployed person who studied puppetry.

We could also look at the UK that has implemented austerity to the point of a second recession.

If by austerity you mean tax hikes and the decision to increase the top marginal rate to 50% two years ago then I am with you. Tax hikes are dumb. But if you mean spending cuts then I don't know what you are talking about.

Why is it a bad idea to borrow that money, at a time when construction was hard hit by the housing bubble bursting, to build roads, rail, high speed internet, any number of things that would set up the business investment of tomorrow?

Because we are bleeding red ink, that's why. Because we should not place future generations in even more debt. Because government should balance their budgets. And if government can't maintain decent roads with the enormous revenue they take in then that's a real indictment of the institution.

And high-speed internet? Why is that a public good? If you want high-speed internet, simply introduce competition. This does not require government expenditures.

And Colin, I share your disappointment when during the debt ceiling debate President Obama and Speaker Boehner seemed to come to a compromise that would have raised $1 of revenue for every $3 in spending cuts to help right our fiscal ship only to have the idea scuttled by Rep. Cantor and a cadre of extreme right Congresspeople.

Um, not sure what Boehner has to do with the fact that Obama has not offered a net spending cut per his campaign pledge and in fact has done the opposite -- a point you refuse to address. But anyway, I guess you missed the Washington Post article on negotiations between Obama and the Hill:

But interviews with most of the central players in those talks — some of whom were granted anonymity to speak about the secret negotiations — as well as a review of meeting notes, e-mails and the negotiating proposals that changed hands, offer a more complicated picture of the collapse. Obama, nervous about how to defend the emerging agreement to his own Democratic base, upped the ante in a way that made it more difficult for Boehner — already facing long odds — to sell it to his party. Eventually, the president tried to put the original framework back in play, but by then it was too late. The moment of making history had passed.

Jason said...

Perhaps we're over parsing higher education. I would put vocational training as higher education. But also no one is making an aspiring electrician study women's issues. People can pursue what they like, but from a human capital development standpoint, a high school degree is not enough.

[A] gainfully employed tradesman strikes me as better than an unemployed person who studied puppetry.

Getting past the condescending tone you use to deride the arts, again I didn't attribute a valuation to the type of higher education.

And even if education doesn't fit neatly into the Wikipedia definition of a "public good" I would still contend a more educated populace is desirable for any number of reasons. Do you disagree with that?

As to investing in infrastructure, that's not the same as maintaining infrastructure and the real money cost will actually be less than the face value of the debt. How is that a bad deal? Are we done investing in this country? If we ever intend to invest in this country again, shouldn't we do it a time when the rates are so low that the real dollar cost of the debt is less than the initial investment?

And high-speed internet access facilitates commerce. Why not have a totally connected country? If you want to talk about selling off the management rights to private entities then let's have that discussion, but increased internet access and speed in this country is a smart investment. I'm sure as we sought to electrify the country, people making your argument would have kept the lights off in distant towns where it didn't make a profit for a company to put them on the grid.

Keeping reading your own citation Colin. After trying to rekindle the negotiations they hit a snag:

Boehner had broken [negotiations] off after word leaked that tax hikes were on the table. His caucus would not stand for them.

And if we're talking about economic debates and fiscal policy I can't help but include this quote from the Post article you linked to:

For years, Democrats have mocked the Republican argument that tax cuts pay for themselves by boosting the economy, an assertion for which evidence is scant. Many independent budget experts say the effect, if it exists, would be almost impossible to measure and useless in crafting a budget.

Jason said...

you amazingly believe you have the capacity to know how much education the country requires

I didn't think it was a stretch to suggest a high school diploma isn't enough education considering the myriad articles and studies that have been released showing how this group is falling further and further behind the more educated.

I bet the unemployed puppeteer wishes he could have the money back he spent on that degree and used it for something else.

No one made that puppeteer study puppeteer-ing. But let's not forget that in the world you seek, this puppeteer, who made his own choice, should not receive unemployment benefits, medical care, or any hand down so that he could go back to school and study something else if he wished. In the world you seek, he made a choice, it didn't pan out, he's screwed. End scene.

We should be able to provide basic infrastructure such as roads without going into debt.

This is ludicrous on its face. How many corporations make major investments without taking on debt of some sort?

For the right price a greedy, evil businessman will no doubt supply anyone with electricity.

So until then we should force people to live in darkness?

As to the "right" spending levels, I never make any such claim to know them. But how much wealth has come from the internet? How much commerce is facilitated by internet access? Building out that infrastructure is one idea in many. My point is that sometimes it makes since, as we live in a world of nations, for a nation not to wait until something is profitable to make an investment. I think it's an increasingly important point when so many other countries aren't necessarily waiting.

why has Paul Ryan vowed to pay for his proposed tax cuts with the elimination of various unspecified loopholes and deductions to pay for them?

I'm glad you noted that those loopholes and deductions are unspecified. It's disappointing that the leading GOP voice on budget won't advance a plan that puts the mortgage deduction or the earned income tax credit actually in his plan, but is very content to gut Medicaid, Medicare, and the social safety net for the most vulnerable Americans.

Besides the Ryan budget, we've had a generation of GOP politicians hearlding the virtue of trickle down economics. Indeed, we've had how many years of the Bush tax cuts? Have they generated any more revenue?

Colin said...

I didn't think it was a stretch to suggest a high school diploma isn't enough education considering the myriad articles and studies that have been released showing how this group is falling further and further behind the more educated.

It isn't enough education if a person wants to be a doctor, but what if they want to own a landscaping business? Be an interior decorator? Mechanic? Furthermore, again, even if more education is useful, why should it be subsidized? The only argument you have offered so far is the unsupported assertion that it's a public good.

No one made that puppeteer study puppeteer-ing. But let's not forget that in the world you seek, this puppeteer, who made his own choice, should not receive unemployment benefits, medical care, or any hand down so that he could go back to school and study something else if he wished. In the world you seek, he made a choice, it didn't pan out, he's screwed. End scene.

No, I realize that no one forced that puppeteer into that course of study, but in your world the rest of us should be forced to subsidize him since you are all about more spending on higher education.

As for your caricature of my idealized world, it's laughable. I'm against medical care? One bad choice and fade to black? Seriously?

In my world, we would inhabit a prosperous economy with low taxes and regulation so that jobs were plentiful and opportunity abounded. I've had situations not work out (been involuntarily unemployed twice) and I found temp jobs and lived off savings until I found something else. The best program isn't government goodies, it's a vibrant job market.

This is ludicrous on its face. How many corporations make major investments without taking on debt of some sort?

You really want to go there, comparing corporations to governments? A corporation that spilled red end for years and years would cease to exist. Its CEO would be fired. Corporations, unlike governments, lack the power to tax which is why they go into debt from time to time. US federal, state and local government are projected to collect $5.1 trillion in 2012. If that's not enough to provide roads for people it's beyond pathetic.

So until then we should force people to live in darkness?

No, sorry, you're the one in favor of forcing people to do stuff, not me. You want to force people to hand over their money to provide goodies to someone else. Personally, I say that if you want electricity, go buy some. Or get a generator. Or batteries. Or some candles. Or move to a city. I'm about free will and choices, you're about the force.

Besides the Ryan budget, we've had a generation of GOP politicians hearlding the virtue of trickle down economics. Indeed, we've had how many years of the Bush tax cuts? Have they generated any more revenue?

Who knows? Why are you asking me? Did I ever defend the proposition that tax cuts produce more revenue? I'm not even interested in defending Paul Ryan, whose budget I don't think cuts nearly enough. I'm still waiting for the part where you criticize President Obama for failing to offer his promised net spending cut, or his absurd budget that was voted down 414-0 in the House in March, or castigate Senate Democrats for not passing a budget in over three years. But instead you seem to want to deflect and talk about other things.

Colin said...

As to the "right" spending levels, I never make any such claim to know them.

You think it should be more than what is currently the case.

My point is that sometimes it makes since, as we live in a world of nations, for a nation not to wait until something is profitable to make an investment.

I still don't get why we can't let companies handle this and why the government must get involved. If high-speed internet is necessary, people will be willing to pay money for it and greedy businessmen will provide that service in order to take that money. You just seem to want the government to be involved for its own sake.

Jason said...

[W]hat if they want to own a landscaping business? Be an interior decorator? Mechanic?

I'd argue it helps to have studied business if you're going to own one. It'd help to study design if that's your career choice. And it'd certainly help to study cars if you're going to be mechanic.

And yes, I believe government should heavily subsidize education if not make the whole endeavor free. Why? Because it's a good idea to have a nation of educated people prepared to compete in the global marketplace. When can certainly disagree on how to get there, but your comments seem to suggest education simply isn't important.

In my world, we would inhabit a prosperous economy with low taxes and regulation so that jobs were plentiful and opportunity abounded.

Business cycle theory tells us we won't have an economy irrevocably moving up and up. So what happens in a trough? What happens when the error term inherent in the markets catches up and business slows and people get laid off? In the libertarian utopia you seek, it'd be like Dickens redux. "Are there no work houses? No prisons?"

A corporation that spilled red ink for years and years would cease to exist.

Or file Chapter 11, wipe out investors and continue on. Clearly a corporation isn't exactly like a government, but who's the arrogant one when you say with certainty that "$5.1 trillion in 2012. If that's not enough to provide roads for people it's beyond pathetic." How do you know? I'm not defending that number, merely suggesting it's hubris to be so confident that that's enough.

You think it should be more than what is currently the case.

I said no such thing. There are things I think the government should pay for, including some things it doesn't currently pay for, but that doesn't mean there aren't other things that can't be cut.

I still don't get why we can't let companies handle this and why the government must get involved

Again, we're a world of nations. Corporations share no allegiances save to their shareholders, and I don't begrudge them that, but it is precisely because of this agnostic outlook that government must be responsive to the citizenry. Ricardian theory sounds very clean until the factory gets moved out of Ohio and into Guangzhou and 500 workers find themselves unprepared to find a new job.

My broader problem with your whole vision of the world, Colin, is that it's been attempted. In the industrial revolution there were no regulations, hardly any unions, workers only had access to what they could pay for. Again, you aspire to Dickens redux. The social safety net we have today was in direct response to the abysmal conditions working people had to deal with when laissez faire economics was in vogue.

Colin said...

Why? Because it's a good idea to have a nation of educated people prepared to compete in the global marketplace. When can certainly disagree on how to get there, but your comments seem to suggest education simply isn't important.

Really? So if someone wants a master's in puppetry then it should be free? After all, more education is good right? Or a PhD in women's studies -- that should collectively be paid for as well right? Do you not understand that subsidies promote over-consumption? Why should be not just let supply and demand work itself out?

You also seem to misunderstand my position. As someone with an MA, the idea that I don't think education is important is ridiculous. Whether education is important or not is irrelevant. I think food is important too, but I don't think it should be free. Do you? I think that, as with food, people should determine how much education they need and then go get it. I don't pretend to know how much food or education each person should consume.

However, what I do know is that the idea all education is valuable and worthwhile is preposterous. Much of it is worthless (as evidenced that people in certain courss of studies cannot find gainful employment after graduation). Again, you also give no consideration to opportunity cost. Every dollar spent subsidizing a master's in puppetry is a dollar that is not spent on other needed items such as housing, clothing or cancer research. Your position gives zero consideration to opportunity cost and is instead no more sophisticated than, essentially, "I think education is good, therefore it should be free" (read: others should hand over money they have earned to pay for it).

As for the global marketplace, if people think they need education to compete, then they should go buy some. That's no reason to give it to someone for "free." After all, we compete not as a country but as individuals.

Business cycle theory tells us we won't have an economy irrevocably moving up and up. So what happens in a trough? What happens when the error term inherent in the markets catches up and business slows and people get laid off? In the libertarian utopia you seek, it'd be like Dickens redux. "Are there no work houses? No prisons?"

Yeah, it would probably be some endless downward spiral, culminating in warlordism. Well, that, or it might be like after every other recession when the economy readjusts and then resumes its growth path.

How do you know? I'm not defending that number, merely suggesting it's hubris to be so confident that that's enough.

The entire interstate highway system cost $500 billion to build in 2008 dollars and took many years. So ten times that number per year should be enough to provide for maintenance and upgrades.

Colin said...

I said no such thing.

You advocate the government spending money on this, so plainly you think that what the private sector already spends is insufficient.

Again, we're a world of nations. Corporations share no allegiances save to their shareholders, and I don't begrudge them that, but it is precisely because of this agnostic outlook that government must be responsive to the citizenry. Ricardian theory sounds very clean until the factory gets moved out of Ohio and into Guangzhou and 500 workers find themselves unprepared to find a new job.

Whaaaa? What does factory jobs moving to Ohio have to do with your desire for the government building high-speed internet instead of companies? What is your logic?

My broader problem with your whole vision of the world, Colin, is that it's been attempted. In the industrial revolution there were no regulations, hardly any unions, workers only had access to what they could pay for. Again, you aspire to Dickens redux. The social safety net we have today was in direct response to the abysmal conditions working people had to deal with when laissez faire economics was in vogue.

You will recall, of course, that my vision of the world with minimal regulation and taxes produced a country that went from being a mere colony of Great Britain to a superpower in less than 200 years. A country that millions of people emigrated to because it was so much better than anything else the world had to offer. So yes, the philosophy of limited government that this country is based on produced some amazing results. Not sure what your point is.

Jason said...

After all, we compete not as a country but as individuals.

That's a handy soundbite, but don't think it bears much scrutiny.

You don't think education should be free. Cool. I do. Since you're unlikely to change my mind and neither of us is in a position to directly influence policy outcomes I'm prepared to agree to disagree on that point.

Though I would suggest that deriding the liberal arts is unbecoming.

Well, that, or it might be like after every other recession when the economy readjusts and then resumes its growth path.

Yes, of course the economy will recover in time. That's why it's a business cycle. But what happens to the individuals when they get laid off and there is no social safety net? No unemployment insurance? No Medicaid?

Or let me ask if a different way, let's say we live in your libertarian utopia and people are responsible for themselves. Worker A has saved up some money because he hasn't had to pay taxes. He's a pretty frugal guy and has managed to have assets totaling one year of his annual salary. The business cycle takes a downturn and we find ourselves in a trough and Worker A is laid off. He's not too worried. he has to draw down on his assets, but he's got a year's worth of salary saved up. Only a week later he gets diagnosed cancer. He has health insurance, but he's been healthy most of his life and bought a bare bones policy and it doesn't cover a lot of the treatment he needs. Now what was enough for a year doesn't get him through three months. What should he do?

What is your logic?

My logic is and always has been that the world isn't so neatly divisible by individuals. We are a society of individuals that must live together. And the markets, though efficient, aren't always kind. People are harmed on the margins. I want to be sure we're protecting those people. As Oliver Wendell Holmes said, "Taxes are the price we pay for a civilized society."

You will recall, of course, that my vision of the world with minimal regulation and taxes produced a country that went from being a mere colony of Great Britain to a superpower in less than 200 years. A country that millions of people emigrated to because it was so much better than anything else the world had to offer.

Wrap yourself in the flag if you like, but let's not forget this was a nation founded on debt. Imagine if the founding fathers had said, "We can't go to war for independence, we lack the money to pay for it!"

My point is, in those 200 years we have evolved as a nation. We have environmental regulations now because we now know more about the environment. We have Social Security now because we had a Great Depression and people lacked the retirement savings they needed. We have come to a consensus that these things are necessary.

I have never said they are infallible and perfect in structure and execution, but to suggest we go backwards in time so they don't exist strikes me as a radical notion.

Colin said...

You don't think education should be free. Cool. I do.

But here is my frustration: you don't articulate why it shuld be paid by taxpayers or respond to any of my critiques. It's nothing more than banalities such as "education is good" or "it makes us more competitive." You refuse to address the overconsumption critique. You refuse to address the opportunity cost aspect. You refuse to explain why taxpayer funding of puppetry studies are necessary and the money is better devoted to that than leaving it with the individual who earned it. You do not explain why government funding of unlimited education is preferable to allowing the forces of supply and demand to allocate education resources.

Though I would suggest that deriding the liberal arts is unbecoming.

People can study whatever they want -- I just want you to explain why taxpayers should foot the bill for this. I don't think that's too much to ask.

But what happens to the individuals when they get laid off and there is no social safety net? No unemployment insurance? No Medicaid?

Again, I've been laid off twice, so I've been there. I didn't need a social safety net (collected a grant total of one unemployment check). I don't think I'm alone. The best social safety net is a vibrant job market, not government programs.

What should he do?

I think he should buy better insurance. If someone fails to buy fire insurance and their house burns down, does society owe him a new house? Furthermore, should extreme scenarios dictate policy? Is that wise?

In any case, I would submit that in Freetopia the individual would have access to both cheaper and more innovative health care than is currently the case.

My logic is and always has been that the world isn't so neatly divisible by individuals. We are a society of individuals that must live together. And the markets, though efficient, aren't always kind. People are harmed on the margins. I want to be sure we're protecting those people. As Oliver Wendell Holmes said, "Taxes are the price we pay for a civilized society."

What does any of this have to do with why government should be providing high-speed internet? I've asked you repeatedly and you come back at me with talk of factories closing in Ohio and quotes about why we pay taxes. Why can't you just provide a straightforward answer?

My point is, in those 200 years we have evolved as a nation. We have environmental regulations now because we now know more about the environment. We have Social Security now because we had a Great Depression and people lacked the retirement savings they needed. We have come to a consensus that these things are necessary.

Again, you are dodging and trying to change the subject. You claimed that limited government results in some kind of Dickensian hell. I pointed out that it produced unprecedented riches and a country that millions of people moved to because they thought it was preferable to most others places on earth. So I don't understand your critique of my preferred ideology given how well it performed (and still does, when given the opportunity, as with airline deregulation, free trade, etc.).

Jason said...

you don't articulate why it should be paid by taxpayers

Because there is more in this world then dollars and cents. Because people benefit from the arts in ways that aren't easily quantified. You want a math equation to explain the exact utility gained by the average person by watching a puppeteer work? I don't have one. But I'll tell you I gain a lot of enjoyment out of watching "Team America: World Police" and so do a lot of people I know. That's worth something.

You do not explain why government funding of unlimited education is preferable to allowing the forces of supply and demand to allocate education resources.

Again, we're not talking specific policies, access and opportunity is important. Rote supply and demand don't allow for that. It is unlimited? No probably not. We have resource constraints and we have to be aware of them.

Could there be overconsumption of education (full stop)? No, I don't think so. Could we have too many English majors or International Affairs professionals? Maybe, but the market can sort that out. What I care about is making sure someone who wants to go farther with their education is prevented from doing so because they weren't born into the right family. What I care about is ensuring people don't graduate college with a mortgage hanging like a millstone around their neck.

I didn't need a social safety net (collected a grant total of one unemployment check). I don't think I'm alone.

That's good for you, but that's not the story for everybody. As Harry Truman said, "A society will be judged by how it treats its weakest members."

What does any of this have to do with why government should be providing high-speed internet?

I never said the government should be "providing" high-speed internet access. I said the government should invest in high-speed internet infrastructure. I never said people shouldn't have to pay for access or that the government must run it.

So I don't understand your critique of my preferred ideology given how well it performed

It performed so well that the people demanded Social Security and Medicare. I'm not arguing against the free market in totality. I'm arguing for a bit more socialism. You're seeking to undo over 80 years of precedent on Social Security. You're saying with absolute certainty that government does too much. That taxes should be lowered. That the current regime is a serious impediment to growth.

But we've lived with Social Security for 80s years. Some of our greatest growth as a nation came post-WWII when we had a vibrant middle class and when we invested in our own infrastructure as Eisenhower was so impressed by the autobahn in Germany. You made the comment that the U.S. achieved "unprecedented riches" but our rise to economic prominence came after the New Deal and after World War II.

It came during a period where 43 of 79 years the White House was held by a Democrat. From 1945 to 1993, times of great growth and innovation in the country the GOP held the House in just one single Congressional session and the Senate for just 5 in 25.

Now surely the GOP wasn't as radical as you would have liked them to be and these are blunt measures, but if government was surely so damning to economic growth and innovation it wouldn't have been the party more well known for "big government" that held sway when the economy saw tremendous GDP growth, right?

Colin said...

Because there is more in this world then dollars and cents.


So public policy decisions on how resources are allocated shouldn't have to be justified on economic grounds? Amazing. Meanwhile, your citation of Team America undermines your argument, as the movie was made without free tuition for puppetry studies. Rather, markets worked. Trey Parker and Matt Stone agreed to financially reward those with puppetry skills, which in turned induces people to study the subject. Moviegoers, in turn, financially compensated the producers for making a movie they enjoy.

And again, should important items such as food, housing, clothing or medical care also be "free"? If not, why not?


We have resource constraints and we have to be aware of them.


But you have said education should be free, so which is it? Either resources are limited and people can only consume limited quantities of education, or it is free and they can consume unlimited amounts.


Could there be overconsumption of education (full stop)? No, I don't think so.


Another amazing statement. You think that, when presented with free goods, people will only consume what they need and nothing more? If so, education will be the first good to experience this dynamic. I would venture that at least 95% of economists would disagree with your assertion.

You also fail to engage with the opportuntiy cost argument. Why should money be taken from me in the form of taxes to pay for puppetry studies or any other form of higher education? How do you know that is the best use of that money? What if I had planned to use that money to pay for my kid's tuition? Or better housing? Or to donate to cancer research? What if a company had planned to hire more workers with that tax money?


What I care about is making sure someone who wants to go farther with their education is prevented from doing so because they weren't born into the right family.


Agreed. They should be able to borrow money to pay for it. Or just work to pay the bills, which is how I paid for grad school.


What I care about is ensuring people don't graduate college with a mortgage hanging like a millstone around their neck.


Also agreed. If they don't want that debt they shouldn't go to grad school, or should make damn sure it makes economic sense. I tell all my friends that consider grad school to make sure it is absolutely necessary and will pay for itself. If they can get by without it then it's a waste of time and money.


That's good for you, but that's not the story for everybody. As Harry Truman said, "A society will be judged by how it treats its weakest members."


Notice he said society and not government. As a society I believe we all have an obligation to help the less fortunate, and I have faith that, left to our own devices, we would.


I never said the government should be "providing" high-speed internet access. I said the government should invest in high-speed internet infrastructure.


So what does that mean? The government should buy stock in internet providers? What is the market failure that government is addressing by spending money here?


It performed so well that the people demanded Social Security and Medicare.


People demanding goodies to be paid for by someone else is not exactly new. This is also not a failure of the free market given that the Great Depression is widely believed to have been the result of bad monetary policy and tariff increases, and the immediate policy response was to raise taxes, regulation and spending.


You're saying with absolute certainty that government does too much. That taxes should be lowered. That the current regime is a serious impediment to growth.


Well, yes. Given the documented history of regulation retarding economic growth and innovation I can't think of why someone would believe anything else.

Colin said...

You made the comment that the U.S. achieved "unprecedented riches" but our rise to economic prominence came after the New Deal and after World War II.

Well, yes. After WWII most of Europe and East Asia was in ruins, leaving the US as number one. But the US was an economic power even before this, which is why Admiral Yamamoto -- who studied in the US during the 1920s -- remarked that the attack on Pearl Harbor had awoken a sleeping giant.


As for your partisan flag waving, I am more interested in policy than partisan affiliation. Let's remember that Democrats in the 1970s did most of the heavy lifting on deregulation of the airline, trucking and rail sectors. Let's remember that Democrats helped pass the 1986 tax reform act that cut the top marginal tax rate from 50% to 28%. JFK cut taxes. It was FDR and Democrats who passed the Reciprocal Tariff Act to reduce tariffs and Bill Clinton who signed NAFTA and GATT ratification. Clinton also signed welfare reform and repeal of Glass-Stegall. Free trade, lower taxes and deregulation -- these are things Democrats all used to be for.


In contrast, Eisenhower went on an infrastructure building spree and expanded social security while Nixon's reign saw the use of price controls, pushed for the establishment of OSHA and declared "we are all Keynesians now." Reagan increased government spending by an average of 7% per year, GHWB increased taxes and Dubs signed Sarbanes-Oxley, a Medicare benefit expansion and spent heavily.

Rather than engaging in this silly game of Democrats good, Republicans bad, I think it makes far more sense to look at specific policies and their impact. The policies I advocate succeed over and over again. Deregulation leads to better economic outcomes. Cutting welfare led to improved social outcomes. Free trade produces a more vibrant economy. Countries with greater levels of economic freedom are also those that at the world's richest, while interventionist countries have poorer outcomes. Left-wing policy, meanwhile, fails repeatedly. Keynesianism never works (failed stimulus bill, failed in Japan in the 1990s). The War on Poverty has produced social misery and a poverty rate that, after steadily declining, stagnated only a few years after the WOP was launched. Health care and Wall Street, both subject to heavy regulation, are also both dysfunctional to varying extents. Clean energy subsidies and high-speed rail are both boondoggles.

Economic freedom keeps winning and government interventionism keeps losing. The only wonder is that, given the huge preponderance of evidence at this point, we are still having a debate on the subject. It's almost as if advocates for expanded government are theological in their belief system, and cannot be persuaded by any amount of empirical work.