Matt Yglesias

Selfishness and the Liberal Order

I’m with Mark Kleiman on this:

The essay by Edward Glaeser to which Matt Kahn points is, in my view, astoundingly wrong-headed. And, as Glaeser notes but doesn’t reflect on, the Adam Smith of The Theory of Moral Sentiments would have agreed with me, and not with Glaeser. The fact that selfishness constrained by law and the market can generate socially useful outcomes doesn’t make selfishness, or the freedom to pursue selfish ends, good things in themselves.

But I would go quite a bit stronger than this. If you think about a well-functioning liberal society with a (constrained) market economy and political liberty, you’re relying on an awful lot of non-selfish behavior by people to make it work. One key issue here is corruption and the efficacy of the public sector. A wise republic needs to think about the incentives facing public officials and design structures accordingly. But at the end of the day, well-functioning public institutions all involve a certain esprit de corps and sense of obligation. It’s not a coincidence that the most market-oriented societies (the Anglophone and Nordic countries) are also the ones with the best-functioning public sectors. Another issue has to do with parenting and family more generally. For a liberal society to function over time parents need to adopt an attitude toward their children that I don’t think is well-captured by the idea of selfishness. But then again, you can’t have everything collapse into nepotism either.

The point is that a society actually governed by the dual pillars of self-interest and obedience to the law is very unlikely to come out as a liberal market economy. What you’d get is a cesspool of rent-seeking and shakedowns. And I think that to the extent that the USA has become a society willing to accept an ethic of “greed is good” this is the direction we’ve headed in.

Nutrition Guidelines and the Limits of the State

Marion Nestle thinks the new food advice guidelines from the government are a step forward, but she’s still got some quibbles:

They still talk about foods (fruits, vegetables, seafood, beans, nuts) when they say “eat more.” But they switch to nutrient euphemisms (sodium, solid fats and added sugars) when they mean “eat less.”

They say, for example: “limit the consumption of foods that contain refined grains, especially refined grain foods that contain solid fats, added sugars, and sodium.”

This requires translation: eat less meat, cake, cookies, sodas, juice drinks, and salty snacks.

That’s politics, for you.

These are good points, especially the last one. And while I of course think Americans should push our government to release the best possible nutrion guidelines, the fact of the matter is that one ought to temper one’s expectations about the ability of a government of a major agricultural producer to get this right on a consistent basis. The good news is that this really isn’t a task that requires the full weight of the federal government to be done well. The costs involved in putting together a pamphlet of nutritional advice and distributing it over the Internet are pretty small and I think maintaining up-to-date and visually appealing advice along these lines is an excellent mission for a non-profit to undertake. I think the Mayo Clinic‘s website is leading the way in useful application of information technology to public health.

Alternatively, we have a lot of sub-national governments here in the United States. And some of them are jurisdictions with little or no agricultural production. If the governments of the country’s fifty largest cities pooled their resources to produce a National Dietary Guidelines document, they’d be well-positioned to give relatively unbiased advice. But just like Saudi Arabia’s not going to tell you to use less oil and Denmark’s not going to tell you to stop playing with legos, the US government is poorly-positioned to say people should eat less meat and grain.

Heading Home

After a lovely vacation here in the Turks & Caicos Islands, I’m flying home today and full-time blogging will recommence tomorrow. TCI has actually been the locus of a fairly fascinating economic and political collapse that’s involved the UK government suspending self-rule and essentially returning the islands to colonial status. Or maybe we should think of TCI as a kind of Charter City experiment.

At any rate, I’m expecting a magazine article from another writer to appear on this subject shortly and I’m looking forward to reading it.

Default By Another Name

Brian Beutler writes about Pat Toomey’s plan to have the government make good on its obligations to bond owners by defaulting on its obligations to seniors, soldiers, etc.:

“I intend to introduce legislation that would require the Treasury to make interest payments on our debt its first priority in the event that the debt ceiling is not raised,” Sen. Pat Toomey (R-PA) wrote in a Friday Wall Street Journal op-ed.

If passed, Toomey’s plan would require the government to cut large checks to foreign countries, and major financial institutions, before paying off its obligations to Social Security beneficiaries and other citizens owed money by the Treasury — that is, if the U.S. hits its debt ceiling. Republican leaders insist they will raise the country’s debt limit before this happens. But first, they’re going to try to force Democrats to accept large spending cuts, using their control over the debt limit as leverage. That means gridlock, and the threat that they’ll come up short.

Now of course this is nonetheless a kind of default. A person whose creditworthiness is above question meets all his financial obligations. Another kind of person might manage to stay current on his mortgage and make minimum credit card payments while leaving utility bills unpaid and welching on sundry promises to friends and business associates. That’s not grounds for foreclosure, but obviously it’s going to hurt your standing as a borrower.

Israel and Egypt

Call me crazy, but my guess (and I’ll certainly emphasize that it’s a guess and not the product of deep understanding of Egyptian politics) is that the full of Mubarak and the rise of a more democratic Egyptian regime would be good for Israel. The peace agreement with Israel was signed by Anwar Sadat for perfectly sound reasons of state and its been maintained for thirty years for equally sound reasons of state. Egypt, unlike Saudi Arabia or Iran, is actually adjacent to Israel so if it’s not at peace with Israel it’s at war—in a non-theoretical way—and war with Israel is not in the interests of the Egyptian public or state. And I think that ultimately paying attention to reasons of state will shed more light on the future course of Egyptian policy than will attempting to parse the theological musings of the Muslim Brotherhood.

But it’s easy enough to see how this fact could be obscured in the minds of many (or most) Egyptian people as the unpopularity and corruption of the regime comes to taint all the regime’s policies, including the ones that make sense. Ultimately, lack of regime legitimacy has sapped legitimacy from the peace deal and that’s bad for Israel. A more legitimate government will come around to Sadat’s calculus but also would be in a position to invigorate peace in a way that Mubarak simply can’t.

And I think a smart Israeli government would recognize this. Instead we have an Israeli government that’s committed to a short-sighted and morally indefensible policy in Gaza that Mubarak has cooperated with but a successor regime probably wouldn’t.

Waste And Reward In Health Care

Is it a contradiction to think that people both underestimate the value of health care and also that the health care system is full of waste? Very well, I contradict myself. Because I agree with Kevin Drum:

I think a lot of people seriously underrate the value of modern improvements in healthcare. It’s not just vaccines, antibiotics, sterilization and anesthesia. Hip replacements really, truly improve your life quality, far more than a better car does. Ditto for antidepressants, blood pressure meds, cancer treatments, arthritis medication, and much more.

I think that’s spot on. The consumer surplus involved in successful medical treatments is gigantic. Indeed, I would say that’s probably a good start at an explanation for why there’s so much waste. But from a policy point of view this is why I often find myself moored between the impulse to “control costs” and the impulse to “expand access.” What I really want to do is promote good health and there are an awful lot of things we could do to do that at very low cost. That’s things like getting surgeons to wash their hands properly and making sure we prioritize treating chronic pain over fighting a “war on drugs.” In general, the most valuable treatments often entail very low marginal costs (though there may be substantial up-front research costs) and properly organized systems are able to deliver them both widely and cheaply.

Strange Disclaimer

I finished Neal Stephenson’s The System of the World earlier today. It’s the third volume in his enormously long Baroque Cycle, a work of historical fiction featuring such characters as William of Orange, Isaac Newton, the Duke of Marlborough, and King Louis XIV of France. I liked it so much that after reading several thousand pages of book proper I read through the acknowledgments and kept flipping all the way to a disclaimer page where I read (per usual):

This book is a work of fiction. The characters, incidents, and dialogue are drawn from the author’s imagination and are not to be construed as real. Any resemblance to actual events or persons, living or dead, is entirely coincidental.

What kind of society includes this boilerplate with ever book? The disclaimer comes, after all, right after several pages of acknowledgments in which Stephenson talks about which historians’ work influenced his portrayals of these historical events and historical characters. It is a work of fiction, but it’s clearly not the case that any resemblance between the “Isaac Newton” character and the actual person, Isaac Newton, is a coincidence. Why lie like that? It’s a heck of a world.

Progress: Technical, Economic, and Human

On the subject of the possibly slowing rate of technological progress it’s worth stealing a point from Gregory Clark’s A Farewell to Alms about the printing press.

If you read a conventional narrative history, or deploy common sense, it’s clear that Gutenberg’s invention of the Movable Type printing press was a transformative moment in human technological progress. It changed everything. And yet if you try to take a rigorous look at the economic statistics, it doesn’t show up. It’s invisible. There was no sustained increase in material living standards associated with the printing press. Or with clockmaking. Or with the sextant or the barometer or the reflecting telescope. Indeed, in terms of sustained increases in per capita living standards all the scientific and technical innovations of the 16th and 17th centuries produced absolutely nothing.

And that’s because, to take the example of the printing press, books simply weren’t a large enough share of overall consumption for massive increases in the productivity of book-making to show up in the data. When better machines for making clothes were in invented, overall productivity surged. But the printing press . . . nada.

Which when you put your common sense cap back on merely reinforces the fact that there’s a difference—a big one—between economically significant technological progress and technological progress that’s significant in a broader sense. What’s really needed in terms of economic growth are innovations that massively increase productivity in sectors of the economy that account for large shares of consumption. What we’ve gotten instead is the Internet, which (like the printing press) is transforming some culturally important, but economic marginal, pursuits.

Nonseverability

The giveaway in the latest court ruling against the Affordable Care Act is the judge’s ruling that the allegedly unconstitutional “individual mandate” is “non-severable” from the rest of the law. That means that all the parts of the law are being thrown out. The provision reducing subsidies to for-profit student loans? Unconstitutional! Expanded Medicaid eligibility? Unconstitutional! Reduced prescription drug costs for seniors? Unconstitutional!

This is the view with the least support in legal precedent, but that does the most to advance the financial interests of the conservative coalition in the United States of America. And that’s about how judging works. The interesting thing, looking ahead to the Supreme Court, is that Justice Kennedy, unlike Judge Vinson, isn’t a dyed-in-the-wool member of the conservative political coalition. That said, he’s pretty conservative on economic policy questions so I’m not really sure where the confidence of progressive lawyers that they’re going to win this case comes from. Ultimately, big constitutional controversies just come down to what the median justice prefers to do.

The Transformative Impact of Ronald Reagan

Time:

[A]s the conversation progressed, it became clear to several in the room that Obama seemed less interested in talking about Lincoln’s team of rivals or Kennedy’s Camelot than the accomplishments of an amiable conservative named Ronald Reagan, who had sparked a revolution three decades earlier when he arrived in the Oval Office. Obama and Reagan share a number of gifts but virtually no priorities. And yet Obama was clearly impressed by the way Reagan had transformed Americans’ attitude about government.

Brendan Nyhan casts some doubts on whether this transformation actually happened, citing public opinion data.

In some ways I think it’s more useful to just look at broad policy outcomes. Suppose someone proposed to repeal Obama, then end Medicare prescription drug coverage, then repeal SCHIP, then repeal the Americans With Disabilities Act, substantially roll back the Clean Air Act and Clean Water Act, reduce Medicaid eligibility, and repeal COBRA. We’d consider that a gigantic rollback of the welfare state, right? This would be a more right-wing agenda than Mike Pence dares propose. And yet it would describe returning the American welfare state to its pre-Reagan status quo.

The remarkable thing, to me, is that if you look at the years 1977-2008 there was a clear trajectory to policy that continued more-or-less unbroken despite changes in party control of different branches of government. Environmental regulations got stricter, the welfare state expanded, and other forms of business regulation declined. The biggest welfare state expansion happened under GW Bush and the biggest deregulatory episodes occurred under Carter and Clinton.

Evan Bayh Off To Work On Prosperity-Enhancing Private Sector Job Creation

Be the change you want to see in the world:

Evan Bayh announced last year that he would not be seeking reelection, and gave a pious speech deploring partisanship. “If I could create one job in the private sector by helping to grow a business, that would be one more than Congress has created in the last six months,” he announced. And now, just a few weeks into his post-public service life, he has already created a job — for himself: “Former Sen. Evan Bayh is joining McGuireWoods LLP as a partner in Washington, the law firm will announce on Monday.”

As a Senator, Bayh had a professional obligation to try to shape American public policy in the best interests of the American people and of the world. As a lobbyist for McGuireWoods LLP, Bayh now has a professional obligation to try to shape American public policy in the best interests of McGuireWoods LLP’s well-heeled clients. I’m not one of the large number of DC-based writers who frequently chats with Bayh, but if I were I’d be interested in learning why he thinks trading the former obligation for the latter one is a change for the better.

The Ideological Point Scoring We Need

I’ve been trying to resist the temptation to use the protests in Egypt as a mere venue for narrow minded point scoring, but damnit I just can’t hold back any longer. If you think back to 2003, 2004, and 2005 you very commonly heard (neo-?) conservatives arguing as if the main thing liberals found objectionable about George W Bush’s foreign policy was that liberals didn’t like the idea of Arab countries being democracies. Liberals tended to say “no, no” that what we didn’t like about Bush’s foreign policy was that his foreign policy was (a) terrible, and (b) getting huge numbers of people killed while (c) accomplishing nothing or (d) aiding the geopolitical aspirations of Iranian hardliners.

And whatever else happens, I think what we’re seeing in Egypt is a definitive refutation of that conservative argumentative frame. You don’t see American progressives out in the streets leading pro-Mubarak rallies, you don’t see Mohammed ElBarradei talking about how the Middle East is no place for freedom, and you don’t see any of the other things you would predict on the hypothesis that criticism of the invasion of Iraq was primarily motivated by a desire to shield Arab autocrats from criticism.

The Solutions We Need

Mark Kleiman on the hugely successful HOPE crime control program:

Just to stress the key point in Keith’s post on HOPE and related programs: not only do they reduce substance abuse and crime, they reduce incarceration. The more general point is that, compared to current practices, well-designed enforcement systems can bring about both less undesired behavior and less punishment.

I say that’s the crucial point for two reasons, one ethical and one political. Ethically, keeping people out of prison is a demand progressives ought to unite behind, even when the mechanism that brings it about is coercive (threats of jail) rather than facilitative (offers of treatment). Politically, less incarceration means reduced cost: HOPE in Hawaii pays for itself about four times over. If you’re a governor facing a fiscal crisis – which is to say, if you’re a governor – doing community corrections right is, potentially, a source of substantial savings as well as a means of reducing substance abuse and crime.

The more you think about the bigger picture and the longer term in America, I think the larger this kind of problem looms. Americans households, despite current economic problems, have very high incomes by global or historical standards. But the USA is also a country where an awful lot of people are in prison and where an awful lot of people are victimized by violent crimes. Crime control reforms that tackle both issues simultaneously offer huge improvements in human welfare.

Fun With Purchasing Power Parity

Groceries are quite expensive at the Providenciales supermarket compared to what you pay in Washington, DC which induced me to want to find out if the price level overall is higher here or if it’s just food. That led me to this neat map of Purchasing Power Parity all around the world:

Richer countries have higher price levels in general. But Japan is not richer than France, Germany, and the UK which makes its high cost of living evidence of a low-productivity service sector.

The Best of Times, The Worst of Times

Tyler Cowen responds to charges of pessimism:

If the numbers for median income growth are low we ought to take that seriously, as does Scott Sumner. We are not cheerleaders per se (BC: “I’m baffled why Tyler would focus on slight declines in American growth when the world just had the best decade ever.” Is it then wrong to focus on any other problems at all? I also was one of the first people to make the “best decade ever” argument, which I still accept.) Medians also matter for the political climate, even though the median earner is not exactly the median voter. Adam Smith’s welfare economics was basically that of the median, a point which David Levy has made repeatedly.

I’m also being called a “pessimist” a lot. Yet in my view our current technological plateau won’t last forever. That’s probably more optimistic than the Hacker-Pierson approach, which requires a Progressive revolution in economic policy (unlikely), although it is not more optimistic than denying the relevance of the numbers.

I more often get this from the other direction where people mistake my agreement with the assertion that 2000-2010 was about the best decade ever for humanity with undue complacency about the problems of the world. But the fact of the matter is that it can both be true that rapid catch-up growth in large population poor countries is a huge step forward for human welfare, and also true that developed countries in general and the United States of America in particular, seem to have run aground to an extent. Indeed, even though it’s not rational for people in rich countries to feel threatened or upset about catching-up happening abroad, it’s also very natural. We would probably feel better about the slow rate of growth in the US over the past 10 years if it had nonetheless been the fastest growth in the world. But, plainly, it wasn’t.

The Fox Effect

Richard Ramsey writes about Fox Geezer Syndrome:

Over the past couple of years, I’ve been keeping track of a trend among friends around my age (late thirties to mid-forties). Eight of us (so far) share something in common besides our conservatism: a deep frustration over how our parents have become impossible to take on the subject of politics. Without fail, it turns out that our folks have all been sitting at home watching Fox News Channel all day – especially Glenn Beck’s program.

The years 2009 and 2010 were a period of declining popularity for Barack Obama, for the Democratic Party, and for progressive politics in the United States of America. Under the circumstances, it’s tempting to examine any particular trend in American political life that operated in parallel to this and see it as advantageous to conservative politics. Hence the skyrocketing popularity of a deliberate kind of political entertainment in which folks like Glenn Beck lie to gullible conservatives about what’s happening in America appear to many as a form of successful political tactic. In reality, however, the declining popularity of Obama, Democrats, and progressives can be easily attributable to poor economic conditions. Now that trends have leveled off and Obama is back at 50 percent and we seem to be headed for a span of so-so growth I think we’re going to find that while Beck has certainly carved out a lucrative business niche for himself, that in political terms creating a paranoid and misinformed base is not helpful.

Change At The Top

David Sanger and Helene Cooper explain the Obama administration’s thinking in not directly calling for Hosni Mubarak to resign:

President Obama’s decision to stop short, at least for now, of calling for Hosni Mubarak’s resignation was driven by the administration’s concern that it could lose all leverage over the Egyptian president, and because it feared creating a power vacuum inside the country, according to administration officials involved in the debate.

In recounting Saturday’s deliberations, they said Mr. Obama was acutely conscious of avoiding any perception that the United States was once again quietly engineering the ouster of a major Middle East leader.

I hesitate to say much of anything about this because, again, what the heck do I know about Egypt. But given that the country is scheduled to have a presidential election in 2012, the terms of that vote rather than the disposition of Mubarak right now seem to me to be the key issue. Obviously, Egypt’s presidential elections are shams. Appointing a new president for 18 months and then holding a new sham election doesn’t do much good. What’s really needed is concessions around the electoral process to give opposition candidates a fair chance.

1688: The First Modern Revolution

Given that use of the term “revolution” to describe a political regime change dates from the Glorious Revolution of 1688, it’s ironic that the conventional wisdom has come around to the view that it wasn’t a “real” revolution at all. In his 2009 book, 1688: The First Modern Revolution, Yale historian Steve Pincus tries to put the “revolution” back in the “Glorious Revolution.”

As if often the case when an amateur dips into a historiographical controversy, at times Pincus seems to me to be reaching with his interpretation. But his point—which I think is well-taken—is that we should see the events of 1688 as one but one episode in a years-long process that really did constitute a Whig Revolution complete with revolutionary wars and a major change in the basic orientation of English economic policy. The parts of the book dedicated to arguing with other historians about how we should understand James II’s agenda are kind of dull, and unfortunately this is where Pincus starts. But the latter parts about the Whig agenda and early liberal politics are fascinating. The Tory view that real wealth is based in land and hence is finite and merely shifted around rather than increased through exchanges isn’t something anyone would admit to believing today, but I think it’s fair to say that a kind of folk Toryism on this point animates a lot of thinking at all points in time. The fact that modern banking is really a kind of invention of statecraft and not a natural part of the exchange economy is important to understand even today and learning about its specific historical origins drives that home.

Service Without Servility

I wrote the other day about how most of the jobs of the future are likely to be pretty banal—think of categories of service sector work that people do today, and imagine a higher proportion of the population being engaged in them.

One response to this vision of the future is to deride it as saying that I’m trying to “convince those without that their future lies as the body servants of those with.” But of course the whole essence of all economic transactions is that you’re doing things for other people. Farmers are growing food for non-farmers. Carpenters are building houses for people to live in, and auto workers are building cars for the middle class to drive. Performing a “service” for someone else in exchange for money is no different from building something for someone else in exchange for money or from growing some food for someone else in exchange for money. But I think we have a cultural hangup around the idea that there’s something inherently servile in the idea of service sector work. That it lacks the dignity that comes with manufacturing employment on an assembly line.

But while it’s of course true that the very worst service sector jobs are in fact bad jobs to have, there’s no reason to see this as being the case generally. We tend to acknowledge this by dignifying a certain sub-set of service sector work that requires advanced degrees as “professions” rather than “services.” Hence your lawyers and doctors and architects. But consider this Planet Money host about a woman who’s pursuing her dream of becoming a Lindy Hop instructor. I wish her well and don’t think there’s anything service or demeaning about sharing expertise in swing dancing with paying customers. And that’s the point—if a smaller number of people are able to produce a larger number of material goods, then then “jobs of the future” will come in the form of more people doing this kind of thing, sharing their (labor intensive) skills and passions with interested members of the public in exchange for money.

WHPS: Who Cares?

Howard Fineman celebrates Jay Carney’s elevation to the post of White House Press Secretary because it shows Barack Obama’s understanding of the need to surround himself with savvy insiders:

[Obama] is setting up his reelection campaign back in Chicago, but that is an expensive piece of window dressing unlikely to convince people that he is somehow still, if he ever was, a guy from the heartland. David Axelrod and the gang will be back in the Windy City, but the operation will be run by a Chicagoan-cum-Washingtonian with national and even global ties — Bill Daley — and a cadre of the best and the brightest of the Clinton administration who came to the city to do good and stayed to do well.

Obama came to the White House in the manner of Jimmy Carter, with whom he was, early on, mistakenly compared. But while Carter never expanded his circle beyond the “Georgians,” Obama has, with stunning swiftness, retooled his administration to play hardball in the D.C. League.

This seems to me to be a reference to a change that simply never happened; there was no point in time when the Obama administration was dominated by “Georgians.” What’s striking about the change between Rahm Emannuel and Bill Daley at the top is that the two guys share the exact same biographical qualities of being DC insiders who are also people Obama knows from Chicago. Beyond Emannuel, the key departed members of the Obama White House Mark One were Axelrod, Larry Summers, and Peter Orszag. Axelrod’s being swapped out for David Plouffe and Summers & Orzag were never “Georgians.” The entire argument that a change is happening really needs to rest on the Gibbs for Carney swap which, in turn, seems to rest on an almost comical overestimation of the role of the White House press secretary.

Apparently this overestimation is widespread in the press in a way that I can only hope reflects cynical source-greasing rather than genuine confusion. But I would say that a good rule of thumb is that whoever has a lot of time to spend batting around questions from the media is, by definition, not spending a ton of time offering input on questions of national significance.