Category: Conservatives

Bumper Sticker Logic

I saw this on a bumper sticker not long ago:

“The Bigger the Government, the Smaller the Citizen.”

I didn’t get a chance to talk to the driver to find out what he thought it meant, but my presumption is that it in line with the conservative idea of limited government. The more limited the government, the more rights for the citizens; and conversely the larger and more pervasive the government, the fewer rights of the citizens. Hence: the bigger the government, the smaller the citizen.

But let’s think about that in the real world. First, let’s think about those countries with little or no government, places like Somalia or Mali. Where there is no government there is not maximum freedom for the citizens, but chaos.

Second, let’s think about those countries that are rich and have high standards of living.  The United Nations has what they call the Human Development Index, which ranks countries according to a number of factors, including life expectancy, education, and wealth as measured by the gross domestic product per capital. (This is published annually in the UN Human Development Report.) [http://hdr.undp.org/en/reports/]

The list for 2011 is here. 

The top five countries are Norway, Australia, Netherlands, US, and New Zealand. All of the top countries are nations with modern regulatory governments with strong social welfare programs. If you go to the bottom of the report you will notice that all of the counties at the bottom, which the UN says are nations with “Low Human Development”, are countries with minimal or failing governments, like Afghanistan and Sierra Leone.

But overall wealth and a high standard of living doesn’t necessarily equate to “liberty” and “freedom.” Perhaps the people of Mali are more free than the citizens of Norway.

Of course one argument is that the people of Mali live in endemic poverty, and so even if they are less burdened by the heavy hand of government, they don’t have the financial wherewithal to exercise those freedoms.

So let’s look at the other side, and consider Norway. Norway is a near socialistic state, with universal health care, a strong welfare system, and a high degree of government regulation of the economy. So are the citizens of Norway veritable serfs? Actually they seem pretty free to me. They seem able to do almost anything they want. In fact we in the US might consider their society rather licentious.

In fact, if you look at the countries on the top of the list (which includes the US, Canada, Australia, New Zealand, Japan and most of Europe) you see countries with a relatively high degree of government regulation of the economy, and countries with pretty generous welfare programs. And are the citizens of these wealthy nations serfs? In any real sense they are the freest in the world. They have open cultures and successful liberal democracies. They have strong economies (as compared to the rest of the world, even considering the recent world-wide recession) and their citizens are generally fairly wealthy and have a very good standard of living. As a result they have the financial ability to pursue a wide variety of educational and leisure options. They are what is commonly referred to as free.

So if one was to consider the real world, and not the logic of a bumper sticker, one would conclude that the reality is that the smaller the government, the poorer the citizen. And since poverty can stunt your growth: the smaller the government, the smaller the citizen.

Roll Over Mister Burke

Once upon a time conservatism was about social stability, and dead set against making dramatic social or governmental changes based on philosophical theories or the whims of politicians. Edmund Burke, the intellectual father of conservatism, created his ideology after watching the horrors of the French Revolution. He said that social and cultural institutions are the repository of the collected wisdom of humanity, and they shouldn’t be changed lightly. He also said that of all the justifications for change, political theory is among the most dangerous. He saw the disastrous attempts by French revolutionaries to put the political theories of the French philosophers—Rousseau, Diderot, Voltaire, et al—into action. This, he said, was the wrong way to take action that affected the lives of millions of people. Burke didn’t oppose change, but he though it should be gradual, evolutionary, rather than revolutionary. He also didn’t oppose political liberty – he was an early and vociferous advocate of American independence, and a strong supporter of Irish independence—but he didn’t think that the way to achieve political liberty was to overthrowing the existing order and replace it with the untested theories of political philosophers.

In the last few weeks we have had two purely speculative ideas thrust into the political debate. As his presidential campaign was tanking, and as he attempted to dodge questions about how he would balance the budget at the same time as cutting taxes, Mitt Romney said that he would make up the revenue shortfall by limiting deductions for the wealthy. The idea was widely panned by most reputable economists, who laid out mathematically that there was not enough money in those deductions to make up for the other planned cuts. The idea should have died a quick death. But then, as Republicans scrambled for a way to make up the massive revenue shortfalls in their budget proposals to avert the so called fiscal cliff, they grasped Romney’s silly idea, and it became the centerpiece of their plan. Again serious economists said that limiting, or even totally eliminating, deductions for high earners would simply not provide the revenue that Republicans were claiming. But they liked the theory, the untested political idea presented on a political whim, and didn’t want to address the political and economic reality.

And then, in the aftermath of the tragic school shootings in Newtown, Connecticut, the chief spokesman for the NRA suggested that there should be an armed guard at every school in America. Within a few days Republican politicians were parroting this line, and some state politicians were even working on legislation to train teachers or school principles to be able to carry a weapon in school. Never mind that this too was an entirely untested idea splashed into the political debate as a rhetorical point by a partisan hack.

Both are exactly the type of untested theories that Burke warned us against. And both were presented by people who call themselves “conservative.” Burke must be rolling in his grave.

What Cuts?

I’ve spend the last thirty years listening to conservative Republicans talking about the need to cut government spending. That’s been a pretty consistent component of conservative ideology at least since Reagan. But the odd thing is that in all of those thirty years I’ve not heard any specifics. I take that back, I have heard a few specifics. During one of the presidential debates, when questioned about specific government cuts he proposed or supported, Mitt Romney mentioned cutting government funding for the Corporation for Public Broadcasting: i.e. Big Bird. That’s it. Thirty years of talking about it and conservatives generally only specifically mention CPB.

There are a couple of reasons for this. The first is that most government programs have constituencies, and promoting specific cuts ends up creating specific enemies, and specific attack ads during a campaign. So if you suggest that, for example, food stamps should be cut, you risk having those cuts thrown in your face in a political attack ad.

The second reason is that mentioning specific cuts creates identifiable bench marks. If you say, for example, that we should cut subsidies to oil companies, and then those subsidies are never cut, you risk having that thrown in  your face as an example of your failure to live up to your promises.

The third reason, however, is probably the most important. If you describe government as this huge entity that needs to be cut you can always rally against “big government.” But if you break it down into specifics it reminds people that many of those government programs are actually beneficial, and then it becomes difficult to make specific cuts. (See point one.) It also allows opponents of the cuts (also known as supporters of the programs) to the describe the benefits of the programs. So mentioning specific cuts erodes their ability to complain about “big government” and “all that spending.”

But after thirty years it is high time that conservatives provide some specifics. It shouldn’t be too hard to do. Simply go through the various cabinet departments and list what you don’t like. Start at the beginning, The Department of Agriculture, and say what should be cut and should be kept. And work through to Treasury. Any politician who can’t do this probably doesn’t have a clear understanding of what the government does. So their protestations of “all the spending” is little more than a primal scream, and should not be taken very seriously.

Boehner’s Plan B

The Republican Speaker of the House of Representatives, John Boehner of Ohio tried to make an end run around the President and his proposal for dealing with the so called “fiscal cliff” by asking the House to vote on what Boehner called his “Plan B.” Plan B was basically a bill that would have allowed taxes to go up for taxpayers making over $1 million, and defer discussion of other maters until later. Boehner’s plan was supposed to embarrass the Democrats, since many of them had proposed such a plan earlier in the year. The problem was that he could not muster enough votes in his own Republican caucus. So Boehner walked away, but before he walked away, he announced in a pique:  

 “Now it is up to the president to work with Senator (Harry) Reid on legislation to avert the fiscal cliff.”

 That’s nice, but there’s only one problem with Boehner’s idea, this little gem:

 “All Bills for raising Revenue shall originate in the House of Representatives.”

That’s from the United States Constitution, Article I, Section 7, Clause 1.

It never ceases to amaze me that conservatives claim deep (deep, deep, deep) deference to the Constitution. Many of them carry around pocket versions that they like to wave around to make a point. But when things don’t go there way, they act like they’ve never heard of the Constitution.

Whether Speaker Boehner wants to deal with it or not is simply irrelevant. Its not the dastardly Democrats, or that slippery Obama, or the liberal press corps that is making him deal with the deficit and the budget. It’s the Constitution.

So Boehner can do one of two things. The first is to do his duty under the Constitution, and work out a revenue bill. Or the second is to walk away, but the coda to that option is that he has to stop lecturing us about his deference to, or supposed knowledge of, the Constitution. He simply can’t have it both ways.  

Princes Among Men

In the last few weeks a number of banks have paid huge fines for various malfeasance. The news today was that UBS will pay $1.5 billion to US regulators for rigging the LIBOR interest rate. The British bank Barclays paid a $450 million fine in June as part of the LIBOR scandal, and both Royal Bank of Scotland and Deutsche Bank are negotiating fines with American and British bank regulators. Just a few weeks ago, HSBC was fined $1.92 billion for laundering Mexican drug cartel money. Standard Chartered Bank was fined $327 million for money laundering in Africa and Asia. And this summer ING Bank agreed to pay $619 million to settle charges that they traded with foreign countries in violations of US trade sanctions.

When conservatives argue against regulating banks and financial institutions they imply, if not outright suggest, that bankers are a particularly noble group of people. They are princes among men. Indeed they are, if he princes we are talking about are from the Italian City states of the Renaissance. They are as greedy and rapacious as the Borgia, as malevolent and malicious as the Medici.   

The GOP and Human Nature

Rick Perry said recently that he wants to “make abortion, at any stage, a thing of the past.” (He was speaking at a press conference organized by Texas Right to Life on Tuesday December 11, 2012.)

This may seem like an admirable and laudable goal, but the problem is that it does not relate to human nature. Whether we like it or not, abortion has existed since the beginning of time, and has existed in every human culture. Abortion exists because unwanted pregnancies exist. And unwanted pregnancies exist because of the fallibility of human nature. People are the product of their nature, and desire, and a hundred other emotions bundled up with the urge for sex, is a product of human nature.

We can only end abortion if we end unwanted pregnancies, and we will only be able to stop unwanted pregnancies if we are somehow able to change human nature.

I recently read a quote from Abraham Lincoln on drinking. Lincoln was addressing the Illinois Temperance Society when he said that to think that criminalizing alcohol would stop drinking and drunkenness is “to expect a reversal of human nature, which is God’s decree and never can be reversed.” [From Raiding Consciousness: Why the War on Drugs is a War on Human Nature, by Lewis Lapham, published in the Winter 2012 issue of Lapham’s Quarterly, and on-line at TomDispatch:  http://www.tomdispatch.com/blog/175626/tomgram%3A_lewis_lapham%2C_drugs_and_the_national_security_state

I am neither praising nor defending abortion, just suggesting that we need to address it as a product of the human condition.

Obamacare, Irony and the GOP

In the wake of Obama’s reelection, a number of states have announced that they will not implement a number of state required provisions of the new law. See, “Kansas, Missouri Won’t Set up Obamacare’s State-Run Health Insurance Exchanges “

The specific provision that a number of states object to is the requirement to set up an “Insurance Exchange.”  The Insurance Exchange is basically a marketplace where consumers can go to price and purchase insurance.

The rejection of this provision by conservatives is ironic for two reasons: federalism and the free market.

It is odd that states’ rights conservatives are refusing to implement a state program and allowing the federal government to create and run the program for the state. This directly contradicts the basic idea of federalism, which is that states are better able to create and run programs that affect the state. While it is certainly understandable that state politicians don’t like the federal government telling them what to do – in this case establish an “insurance exchange” – any federalist worth his salt would say that even if the program is mandated the states are better able to create the specifics of the program for the state. I know that these politicians are refusing to act simply out of spite, but the irony of their behavior is laughable.  

But the clear rejection of federalism is only one of the ironies. The other is the rejection of free market principles. The Insurance Exchange is a one stop market for health insurance. It is essentially an Amazon for health insurance. Currently a person shopping for insurance can go to different insurance companies and try to interpret their policies, and then must go to an insurance agent to actually purchase the insurance. As someone who has purchased health insurance as an individual I can tell you that this is a difficult process.

One principle that is supposed to be the foundation of the free market is the free availability of information. A free market only works if purchasers have access to all pertinent information about the product they wish to buy. A consumer can only make an informed choice in the free market if they have all the information they need about the desired product: the price, the quantity, the quality, the selection, the availability of alternatives. Theoretically the free market works best when consumers know the most about the products they want. It is only through that knowledge that consumers can buy the least expensive, or highest quality products, and thus, through the magic of supply and demand, drive costs down.

The purpose of the Insurance Exchange is for each state to provide a comprehensive list of all the available insurance options within the state. This allows the consumer to make an informed choice, and select the insurance policy that best meets their needs. It is a marketplace out of Adam Smith’s dreams. And yet conservatives reject it. It kind of makes me wonder if they think through their policy choices, or if every choice is a simple, and thoughtless, knee jerk reaction.  

Buildings are People My Friends

Former Republican Presidential Candidate Mitt Romney famously said that “corporations are people, my friends.” His comment was in response to complaints by some people about the Supreme Court’s Citizen United case that allowed corporations to donate to political campaigns. I suspect that what Romney was trying to say was that people are heavily involved in corporations, essentially that people create and own corporations, and hence profit from the, and many other people work at corporations, and hence owe their livelihoods to corporations. In this he is correct, but still misses the point.

Exactly the same thing can be said about buildings. People make money from building buildings and from owning buildings, and many people go to work every day in buildings. But we can all see the absurdity in saying that “buildings are people, my friends.” Simply alleging that because many people rely on buildings, or corporations, for their livelihood and well being, does not make a building, or a corporation, a person.

Corporations are an artificial business entity that allows the owners of a business to limit their risk. While this may sound like a dodge, or a way to avoid responsibility, the reality is that this limitation of liability is actually a very good thing. Many high risk endeavors throughout human history might not have been attempted without this limitation of risk. A number of the first American colonies were business ventures and were formed as government chartered corporations. This allowed the investors to invest money in the enterprise without the potential future risk of paying out more of their personal assets should the endeavor fail. Throughout American history corporations have been an important component of the development of canals and railroads and other risky and capital intensive enterprises.

But just because corporations are important does not mean they are without fault. This shield against liability can make a corporation dangerous. The nation’s founders understood this, and in every state strictly proscribed corporations. Most states required that the incorporators obtain a charter granted by the state legislature. This greatly limited the number of corporations, and meant that the incorporators had to convince a legislative body of the need for the corporation and its ability to provide a societal benefit.

It was only after the Civil War, and the growth of large scale industrial companies, that states changed these laws and allowed for general, as opposed to specific, charters of incorporation. But politicians and the courts were still highly skeptical of corporations. Over the years, however, limits on corporations slowly eroded, as business interests lobbied state governments to ease rules and restrictions. Now there are few restrictions on the type and scope of business that a corporation can engage in.

And while most of the largest commercial enterprises in the nation are corporations, and those corporations employ millions of people, and are often the engine of our economy, some owners can and do abuse the corporate form. I am a lawyer and I’ve dealt with business entities that are made up of overlapping and intertwining corporate entities. The purpose for this is not to limit liability but to evade it.

It is very common for the developers of residential real estate to create a corporation for a project – say a residential subdivision –  and then when the project is complete they dissolve the corporation. And then, if there is a problem with a house or a street, and the homeowner or neighborhood association sues, they will be suing a dissolved corporation with no assets. And the developer will move on to another project.  

So Mitt Romney may have been right to suggest that people often benefit from corporations, but that does not make corporations people, my friends, any more than it makes a building a person.

 

  

  

Don’t Like the Results, Kill the Report

Apparently earlier this year the Congressional Research Service (CRS) issued a report on the correlation between the top marginal tax rates and economic growth. Spoiler alert, the report found no correlation between lowering the top marginal tax rate (the rate on the so-called job creators) and an increase in overall economic activity. This result, of course, runs counter to the main thrust of the current Republican economic policy, which is to push for lower taxes on “job creators” in order to create more jobs.

So what did the Republicans in Congress do when they got the report? They demanded that the  CRS withdraw the report.  And since the CRS works for Congress, and Republicans are in the majority, they CRS had no choice but to withdraw the report.

But there is magic in the internet. Things really don’t disappear, so the report is available here.

The New York Times story is also available here.

The overall conclusion of the report:

The top income tax rates have changed considerably since the end of World War II. Throughout
the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%.
Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s;
today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until
the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income
distribution are currently at their lowest levels since the end of the second World War.
The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate
and the top capital gains tax rate do not appear correlated with economic growth. The reduction in
the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The
top tax rates appear to have little or no relation to the size of the economic pie.

However, the top tax rate reductions appear to be associated with the increasing concentration of
income at the top of the income distribution. As measured by IRS data, the share of income
accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before
falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the
top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to
how the economic pie is sliced—lower top tax rates may be associated with greater income
disparities.

Run Government Like a Business? Yeah, which business?

It is a favorite suggestion of Republicans: government should be run like a business. A recent example is from a Republican candidate for Governor named Phil Moffett. His commentary in the Herald-Leader may be here: http://www.kentucky.com/2010/08/23/1403050/give-teachers-more-authority-parents.html [Note the Herald-Leader tends to hide their content after a few days]

Moffett notes a number of real problems, and I agree with him on some of the solutions. I agree that disruptive students should be removed from the classroom, and I support some forms of Charter Schools.

But the idea that government functions should be run like a business has always amused me. According to the Small Business Administration, one third of small business fail in the first two years, and over fifty percent fail within five years. That is a dismal success rate. The suggestion that government should be run like a business implies that businesses are uniformly efficient and well managed. But the numbers suggest otherwise. The concept also suggests that businesses are somehow unique in their ability to plan for the future, but if anything, the numbers say exactly the opposite.

I also wonder what business they are talking about. Certainly there are well run businesses out there. But we do not compare runners against Olympic athletes. Many businesses fail because of fraud. Remember Enron, or what about Bernard Madoff? Businesses men are no more or less noble than politicians.

You may have seen this headline: Plunging home sales could sink recovery.

Here’s the full story: http://money.cnn.com/2010/08/24/real_estate/existing_home_sales/index.htm?source=cnn_bin&hpt=Sbin

There is such a glut of excess housing that it is not only depressing home prices but it is causing potential buyers to be exceedingly cautious. They do not want to buy a house only to have the price go down. And the price could go down because there are so many excess houses out there.

And why are there so many houses available? Because of the business decisions of home builders and bankers and mortgage lenders (and certainly also decisions by government regulators and bureaucrats). If businessmen are so smart, how did they create this recession? And if they are so smart why didn’t they realize that was happening? And if you want to lay it all at the feet of government bureaucrats (at agencies like HUD and Fannie May and Freddie Mac) then you are admitting that all of those businesspeople were duped. But how could they be duped if they are so smart? Perhaps it is because they are not so smart after all.

Government can certainly learn things from business. But the idea that government should be run like a business is silly and simplistic.