Tag Archives: Obama

The United States is not an Optimal Cultural Area

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Arnold Kling is worried that political polarization has gotten so bad that it could lead to a civil war. While I think an actual war is unlikely, life among the culture warriors can get pretty tiresome. At least in a war, the true believers would get killed off, and the rest of us could live in relative peace after it was over. I fear that our fate will instead be to have to continue to live with these people.

This raises an important point: we don’t all have to live together in the same polity, at least in theory. The continued existence of the United States of America, as a political entity, is optional. It is worth at least considering whether we should peacefully go our separate ways instead of continuing to outrage each other. And if we don’t go our separate ways, what is our motivation? Why are we doing this to ourselves and each other?

In international monetary economics, there is the idea of an optimal currency area. The gist is that since the monetary authority controls monetary policy for everyone in the currency union, it is important that the monetary stance it selects is appropriate for everybody. If some regions in the same currency union have very different economies, then there will be a lot of unhappy people one way or the other—either because recessions in some areas are not met with stimulus or inflation in some areas is not met with tightening.

It seems to me that there is an analogy to be made with the culture wars. The United States is not an optimal cultural area. We have empowered the government to make social policy for everybody, but of course different regions and groups have very different cultural values. This ensures that no matter what, some group or other is going to be very unhappy, and this means culture wars.

Consider the multiple levels of absurdity involved in the recent conflict over Todd Akin’s remarks about rape and abortion. First of all, it is absurd that someone who wants to put himself in charge of making social policy would be so woefully misinformed about basic biology. I am obviously not alone in pointing this out.

Second, consider that the question that Akin was responding to was about a “compromise” policy that addresses absolutely no principled person’s concerns, on either side. If you really believe that every embryo is sacred, then an abortion in the case of rape is murdering a child for the sins of its biological father, which is pretty horrific! If you really believe that fetuses are not persons and that legal abortion is part of protecting a woman’s right to autonomy and privacy, then, say, making a recently-raped woman prove to a (probably male) judge that she was raped in order to get permission to have an abortion is similarly horrific. Who exactly thinks this is an attractive compromise?

Third, some accusations of rape are false. This fact might be offensive to some, who apparently believe, out of solidarity with rape victims, that all rape allegations are a priori true. In addition, if accusing someone of rape were the only way to get a legal abortion, would you not expect that the rate of false rape allegations would increase? Whatever the insensitivities of using the phrase “legitimate rape,” people need some way of talking about the false rape allegation problem. Akin probably does not believe that some rape is OK, so lambasting him for such poor phrasing seems a lot like political opportunism, not an attempt to change minds. Although again, lambast away for his poor biological aptitude.

Fourth, here are President Obama’s comments: “What I think these comments do underscore is why we shouldn’t have a bunch of politicians, a majority of whom are men, making health-care decisions on behalf of women.” SAID THE GUY WHO INVENTED OBAMACARE, which politicizes healthcare decisions, such as the kinds of insurance coverage people, including women, must buy.

If I’ve offended anyone with the preceding four paragraphs, I’m mildly sorry, but I have good news: our social values don’t have to remain in conflict. We can choose to live near other like-minded people and ignore the cultural values of non-like-minded people who don’t live near us. Abortions for some, miniature American flags for others.

We can pursue such a strategy either by adopting libertarian attitudes or through a political reconfiguration, such as splitting the USA into five or so regional sovereign governments. I suspect that these solutions are non-starters. People don’t really want to live in peace according to their own values; they want to impose their own values on others. Neither libertarianism nor political dissolution affords people the opportunity to browbeat others into adopting one’s beliefs, and that is why they won’t happen. Which means that we are stuck, unfortunately, in a suboptimal cultural area.

How Not to Care About Politics

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Adam Ozimek thinks I’m crazy. With respect to the presidential election in 2012, I wrote on Twitter that I’m “Pretty much indifferent between Palin / Bachmann / Obama / Romney / Huckabee / Gingrich / Trump. I won’t lose any sleep no matter what.”

I should be clear that I’m not indifferent to the outcome on any given policy matter. I am a pretty radical libertarian; I have clear policy views. Nevertheless, over the past few years I have cultivated a serene detachment from day-to-day politics. I don’t vote, and I don’t worry. Here are five reasons why.

The importance of politics is overrated

I was persuaded of this point by Steve Davies, who gives a fascinating lecture on non-political perspectives on history (one version of the lecture is on YouTube, highly recommended). Most of the history that you learn in high school is political history, a history of power: kings, presidents, wars, revolutions, and so on. But taking a commercial or economic perspective on history can show you how much politics has been oversold. Davies shows that, for instance, the invention of mass production, the shipping container, the birth control pill, and the Internet have been arguably more important over the last century than any presidential election.

This is not to say that individuals cannot do tremendous damage by political means. R.J. Rummel estimates that 262 million people were killed in the 20th century by their own governments, and of course governments have killed millions of foreigners as well. This is a good reason to be anti-government. But I’m not persuaded a priori that any of the candidates I named is likely to be significantly less destructive than the others. And I’m optimistic about our ability to flourish through commercial innovation no matter who you guys elect in 2012.

The Good vs. Evil story about politics is not true

As Tyler Cowen says, be suspicious of stories. It’s tempting to think about contemporary politics as a story of good guys versus bad guys. Whether the dichotomy is political parties or cosmopolitan versus provincial, people like the good versus evil story because we are biologically programmed to respond to it. Politicians have an obvious incentive to say that they are one of the good guys and their opponents are bad guys.

But who are the good guys in American politics? I look around and I see lots of people wanting to impose their values on others. Even many libertarians, who nominally say that they don’t want to impose their values on others, seem to want to impose libertarianism on the public through electoral victories. That is no way to treat unwilling minorities. It’s not that politicians are especially evil, either, though I do think that politics attracts a certain megalomania. Mostly, politicians of all stripes are ordinary, flawed, misguided people.

Recognize that a) stress kills and b) you can’t make a difference

It would be one thing to get worked up over politics if by doing so, you could affect political outcomes. But the odds of casting the decisive vote in any election of consequence are vanishingly small. It would be more probable to get struck by lightning on two consecutive days. And there are so many voices in political discourse that you’re nearly as unlikely to make a difference there, even if you are a respected blogger.

Even though few of us can make a political difference, many of us get worked up over politics. This is damaging to our physical and mental health. I worry that one particularly apoplectic econblogger, a talented economist, will literally die suddenly of a stroke. We’re much better off if we can recognize that for better or for worse, we have very little control over what happens politically, and there’s no reason to get stressed out about it.

Politicians often can’t act on their preferences

If there is any issue that motivated the 2008 presidential election, it was George Bush. Obama ran on a platform of “change,” and I believe that he was sincere. Nevertheless, we are still in Iraq and there is still a prison at Guantanamo, at which military tribunals will be held. Furthermore, Obama has opened up a new front in Libya. “I have decided to repeat George Bush’s mistakes,” mocks Ryan Young.

Events can be simultaneously absurd and inevitable. The fact is that Obama faces all kinds of political and institutional constraints in the execution of his role as president. There are not as many degrees of freedom as it may at first appear. Adam emphasizes the discretion that presidents have, and undoubtedly they do have some. But if Obama can’t even close Guantanamo, something that I believe he really wants to do, then the presidency probably matters less than people think.

The logic of reoptimization

One useful way of thinking about politicians is that they want to tinker with prices. They raise the price of some goods by taxes, regulation, or outright bans, and lower the relative price of other goods through subsidies, i.e., raising the price of everything else. Different politicians want to tinker with prices in different ways, and many of them want to undo many of the tinkerings of their predecessors.

If a politician wants to raise the price of something that I consume and lower the price of something I don’t consume, that makes me immediately worse off. But once I reoptimize for the new set of prices, I may be only slightly worse off, or perhaps even better off than before. I can consume more of the thing of which I used to consume less. For this reason, even bad politicians may be less harmful than they at first appear.

Worst case scenario, I’ll reoptimize to another country. Probably such a move would make me worse off (or else I would do it now), but it still places a real limit on how much the president is likely to harm me. I am probably more elastic in this respect than most Americans, but nevertheless if the worst possible outcome is that you move abroad, something that many people do voluntarily every year, it’s not that hard to relax about politics.

I invite you all to join me in serene detachment from politics. You will worry less and have more time to spend on other pursuits. What do you have to lose?

Play the Advisor Game

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The New York Times has a piece on Obama’s latest stimulus proposals.

[Obama] chided Senate Republicans for engaging in “pure partisan politics” by holding up a jobs bill that would offer tax breaks to small businesses and ease credit with a $30 billion initiative to channel loans through community banks.

Community banks!? That‘s the stimulus plan?

The president also said he and his team were “hard at work in identifying additional measures,” including extending tax cuts for the middle class that are scheduled to expire this year, increasing government investment in clean energy and rebuilding more infrastructure.

What a joke. Sorry, but none of these is going to make a significant contribution to ending the recession.

Maybe we can help Obama identify some additional measures to stimulate the economy. Here are the rules. First, your proposal must be revenue-neutral, or at least very cheap. Second, Sumnerian monetary policy (which I support) is off the table as “too obvious,” as is encouraging people to counterfeit. Third, your proposal needs to provide actual short-term stimulus, not just be good long-term policy.

My proposals:

First, permanently eliminate the employer portion of the payroll tax and charge it to employees instead. Remember, in the long run this change makes no difference whatsoever, since the incidence of a tax is the same no matter who technically pays it, as long as prices are flexible. But the reason labor markets don’t clear in recessions is that the price of labor (the wage) is not flexible. Real wages need to fall to clear the market. Shifting the payroll tax burden to employees would be an immediate cut in real wages, which would induce greater hiring and a lower quantity of labor supplied, moving the market closer to clearing.

Second, let in several million more immigrants. There are 19 million unoccupied houses in the country. The malinvestment in housing has decreased homeowners’ and investors’ net worth, which is creating fear and uncertainty. The wrong way to solve the housing problem is through subsidies which encourage further malinvestment. The right way is to make the malinvestment an ex post good investment. This can be done by importing residents, demanders of housing. Start by eliminating quotas for H1B and student visas, but ultimately, if people promise not to go into the construction industry, let them in. This proposal would have been even more stimulative during the financial crisis when it could have also propped up the value of mortgage-backed securities, but it would still do some good now.

Are there flaws in my proposals? What would you suggest instead or in addition?

Free Speech for Foreign Corporations

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There is lots going around about Justice Alito’s Joe Wilson moment at the State of the Union address.  In reference to the recent Citizens United case, Barack Obama said:

With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests—including foreign corporations—to spend without limit in our elections. I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities. They should be decided by the American people. And I’d urge Democrats and Republicans to pass a bill that helps to correct some of these problems.

To this, Alito, J. was clearly seen contorting his face and mouthing the words “not true.” And it wasn’t true. As Linda Greenhouse notes, the Court did not overrule a century of law. And according to PolitiFact, the court did not reach the question of free speech for foreign corporations:

The majority opinion, authored by Associate Justice Anthony Kennedy, maintained that the court was not specifically overturning this barrier to foreign campaign spending, essentially saying that it was outside the scope of the opinion.

“We need not reach the question whether the Government has a compelling interest in preventing foreign individuals or associations from influencing our Nation’s political process,” the majority wrote.

While Obama’s statement was indeed not true, I wish it were true. There is nothing pernicious about foreign corporations being able to buy TV ads making a case for how Americans ought to vote. The idea of a corporate nationality is murky to begin with. Should the nationality be determined by where the corporation’s headquarters are located? By where it does the most business? By the nationalities of its shareholders, of which none may constitute a majority?

But more importantly, the case for free speech is persuasive not because it gives people the right to speak in a vacuum, but because it gives people the right to listen to whatever speakers they wish. For the government to hold that I do not have the right to listen to what foreign corporations have to say, but that this is nevertheless consistent with the principle of free speech is shockingly Orwellian. Even if foreign corporations want to argue that the US government is evil and should be overthrown, what is the harm in that? If they are wrong, I can ignore them, and if they are right, I would want to know.