Democracy in America

OFTEN it happens that the ideal technocratic solution to an urgent economic problem of national scope is incompatible with the beliefs or incentives of policymakers. A small cadre of economists specialise in understanding how the incentives of politicians and bureaucrats affect economic policy and performance, and they often have enlightening things to say about the gap between ideal and politically feasible policy. Most economists, however, do not.

The toy worlds of economic models—even the most sophisticated—rarely account for politics, and almost never account for ideology. Consequently, most economists have nothing especially useful to say about the failure of governments to implement the best blackboard solution. It doesn't have to be this way. For decades Douglass North, a Nobel-laureate economic historian, has been harping on the importance of integrating into economic explanations the beliefs or "mental models" that account for the way culturally-embedded individuals mentally represent and order their choices. In his 1993 Nobel lecture, Mr North said:

Belief structures get transformed into societal and economic structures by institutions—both formal rules and informal norms of behavior. The relationship between mental models and institutions is an intimate one. Mental models are the internal representations that individual cognitive systems create to interpret the environment; institutions are the external (to the mind) mechanisms individuals create to structure and order the environment

There is no guarantee that the beliefs and institutions that evolve through time will produce economic growth.

Indeed, as Mr North makes plain, growth is the great exception to the historical rule. It's only a slight exaggeration to say that, to a first approximation, human beliefs and institutions have never produced economic growth. 

I bring all this up because economists lately seem to be flailing around a great deal in search of an explanation for the failure of Congress and/or the Fed to implement the policies their models prescribe. Watching economists concoct political explanations is by turns painful and amusing in much the same way watching ballet dancers try to sing opera is painful and amusing. Few of them have any relevant training, most of them do it terribly, but a handful seem to have a touch of delightful talent. Judging from his column last week, Paul Krugman should stick to dancing.

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YOU probably can't fund a government on the basis of voluntary donations. I'm not sure it's ever been tried, but it seems like an idea that's unlikely to work. This, I think, is the gist of what Stephen King is saying when he takes on the irritatingly undead meme that rich people who think rich people should pay more taxes ought to just donate more of their own money to the government. My colleague is right that Mr King's rebuttal of this position may not be the most cogent one imaginable; Mr King is a master of enticing people to suspend their disbelief in unlikely theories, not of cutting those theories down. But I don't understand the distinction my colleague draws here:

First, he seems to think there is a class of problems that belong to the nation as a whole. Then there's the thought that problem-solving efforts financed by gifts from the rich people will prove ineffective, while efforts financed by taxes can work.

It seems clear to me that part of the reason why certain classes of problems belong to the nation as a whole is precisely that efforts to solve those problems through gifts from rich people will prove ineffective.

The key to Mr King's point here turns on a phrase i think my colleague glosses over too quickly. Mr King says rich people cannot "assume responsibility" for America's national problems. "Assume responsibility" is different from "write the occasional cheque", no matter how large. Rich people can make donations that may accomplish a short-term goal or two. They cannot guarantee long-term funding for projects or social institutions at the national level. What Steve Ballmer funds today, he may decide not to fund tomorrow. Indeed, this is precisely the problem with the way charitable foundations like the Gates Foundation or the Clinton Foundation work: they tend to lavishly fund the "hot", media-friendly priorities of the moment; they rarely or never endow projects that are not sexy and not counterintuitive, have no ultimate goal or exit strategy, and require many years or decades to take effect. Billionaires can accomplish things, but they cannot assume responsibility for national problems. No voluntary group of billionaires can guarantee benefits to every American retiree 25 years from now, not just because they don't have enough money, but because their commitments are voluntary. This is not a difference of scale; it is a difference of kind. Of course, nothing in this world is certain. But the closest we can come to making guarantees, in our society, is to assign the issue to the body which, with the authority vested in it through democratic elections, can levy taxes on the entirety of the economy and set binding rules to address that problem.

In the end I think my colleague is as anxious as I am to see the "if-you-want-your-taxes-raised-why-don't-you-send-the-IRS-a-bigger-cheque" meme finally dead and buried. As he says (referencing Mike Konczal), in the end, the question is about "the fairness of the way the tax code distributes the burden of taxation. Only changes to the tax code can fix inequities in the tax code. Donating or not donating to the government has nothing much to do with it." But this is a hard meme to kill! Stephen King seems to be doing a pretty decent job of trying, and the distinction my colleague draws seems to me to only breathe a vapour of false vitality into a tortured undead creature that ought to be allowed to go into the light.

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Morten, our cartoonist, offers his latest take on the race for the White House

See Morten's previous cartoons here and here.

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ON MONDAY the top EPA official for the South and south-west resigned because of outrage on the part of some Christians that, two years ago, he had stated he intended to "crucify" oil companies that violate the law. This resignation makes it all the more outrageous that so few have seen fit to express outrage at the outrageous remarks made by Ted Nugent earlier this week to the Associated Press. Mr Nugent said his prosecution in a US district court for illegally transporting a black bear he had killed across state lines was a "witch-hunt" by federal officials angered at his claims that the government is planning to take his guns away.

Coming just days before the Walpurgisnacht celebrations of April 30th, Mr Nugent's comments are infuriating, ignorant and egregiously offensive to witches everywhere, and their families. Anyone who has endorsed or defended Mr Nugent must publicly distance themselves from him and his comments, which are insensitive to the point of bigotry.

My views on this subject may be slightly influenced by the fact that I've spent the past couple of days in Germany's Harz Mountains, where witches and Walpurgisnacht are a big deal. Nevertheless, it seems clear that Mr Nugent's comparison of his own prosecution on grounds he admits are legitimate to the genocidal persecutions suffered by witches throughout Europe and America up until the 20th century is unacceptable. Has Mr Nugent been burnt alive on the uncorroborated testimony of a 16-year-old girl? Has he been interrogated with the hot tongs? Has he been broken on the rack? I think not. And I hope that America has not become the sort of country where arguably prominent people can use common figures of speech that members of certain religious denominations might deem offensive, without having all presidential candidates publicly denounce them by name. What kind of America would that be?

(Photo credit: AFP)

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EVERYBODY who liked Norman Ornstein and Thomas Mann's piece in the Washington Post on Sunday has something to quibble about, so I'll get mine out of the way now. Messrs Ornstein and Mann write: "While the Democrats may have moved from their 40-yard line to their 25, the Republicans have gone from their 40 to somewhere behind their goal post." It's not entirely clear what time period the authors are talking about, but their observation doesn't work for any time period I can think of. The Democrats, as far as I can see, have moved from their 40-yard-line to midfield, or their opponents' 45. As recently as the Clinton presidency, Democrats actively pushed for gun control, defence budgets under 3% of GDP, banning oil exploration off America's Atlantic and Pacific coasts, a public option or single-payer solution to universal health insurance, and...well, Clinton-era progressive income-tax rates. Today these positions have all been abandoned. And we're talking about positions held under Bill Clinton, a "third way" leader who himself moved Democratic ideology dramatically to the right, the guy responsible for "ending welfare as we know it". Since then, Democrats have moved much further yet to the right, in the fruitless search for a compromise with a Republican Party that sees compromise itself as fundamentally evil. The obvious example is that the Democrats in 2010 literally passed the universal health-insurance reform that had been proposed by the GOP opposition in the Clinton administration, only to find today's GOP vilifying it as a form of Leninist socialist totalitarianism.

That said, I thought the article was pretty solid. Robert Kaiser (h/t Kevin Drum) highlights the wonky political-science aspect of the argument: the GOP has made the deadly (though politically effective) move of adopting the norms of Westminster-style parliamentary discipline within an America-style presidential system, where such norms bring the machinery of government to a grinding halt. "Today’s Republicans in Congress behave like a parliamentary party in a British-style parliament, a winner-take-all system. But a parliamentary party—'ideologically polarized, internally unified, vehemently oppositional'—doesn’t work in a 'separation-of-powers system that makes it extremely difficult for majorities to work their will.'"

And yet I can't help but feel that there's more going on here than a shift in the GOP's character or strategic doctrine. Ideological or partisan polarisation has been rising for the past decade-plus in democracies all over the world. Westminster systems may in theory be designed to operate smoothly under conditions of polarisation, but in fact over the past two years the canonical Westminster countries—Britain, Canada and Australia—have all found themselves struggling with the extraordinary spectre of hung parliaments. The French presidential elections on Sunday found the extreme left and extreme right sucking away record portions of the vote, with the two major parties left fighting over a shrinking and uncertain centre. America finds it unusual that for over a decade (since the disputed 2000 election), its governing parties have faced a "crisis of legitimacy", with large segments of the opposition refusing to accept their right to govern; but this is the same period in which governments across the world have faced "color revolutions" whose rhetoric and attitudes have also been geared at engendering crises of legitimacy. Something appears to be driving democratic governance towards polarisation, all across the globe. What can be done to reverse the trend?

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HEY, Barack Obama! You want to win re-election, don't you? Of course you do. (It was a rhetorical question, Mr President.) Here's what you need to do: come out in favour of all my favourite policies. Landslide!

This is never good advice. But pundits cannot seem to stop giving it. Matthew Yglesias long ago dubbed this error the "pundit's fallacy", which he defined as "the belief that what a politician needs to do to improve his or her political standing is do what the pundit wants substantively". Robert Reich, a former secretary of labour (pictured), offers in the San Francisco Chronicle an open letter to the president the whole of which amounts to an audacious, extended example of Mr Yglesias' fallacy.

Mr Reich presents his progressive wish list as "a clear, bold strategy for boosting the economy" capable of leaving the too-close-for-comfort Mitt Romney in the dust. Yet he offers no evidence whatsoever to the effect that "forcing banks to help distressed homeowners, stopping oil speculation, boosting spending until unemployment drops to 5 percent and fighting to ensure economic gains are widely shared" constitute a winning strategy. I'm fairly confident Mr Obama will adopt few of Mr Reich's recommendations, and little of his rhetoric. Why not? Does Mr Reich know something Mr Obama doesn't? No. Indeed, Mr Obama knows a great deal Mr Reich doesn't. He has a whole horde of public-opinion professionals constantly monitoring the disposition of the American electorate. The difference between Mr Obama's actual strategy and the one tendered by Mr Reich, a putative ally, will stand as a measure of the ineptness of Mr Reich's advice. My question is, why do pundits waste our time with this stuff?

Does Mr Reich really believe that if only the president came out loud and proud in favour of his recommended proposals, the voting public would rally to his banner? Or maybe he believes that arguing in favour of a strategy that would probably be ruinous were the president to actually adopt it will nevertheless move public-opinion marginally in the direction of his preferences, and that eventually, if he keeps flogging this wish list, voters will begin to come around, and this will one day become a viable platform. Both possibilities seem unlikely to me. The only way I can see Mr Reich actually helping Mr Obama is by making him look moderate in comparison. Is that what he's trying to do? Again, I doubt it. So what's he up to? Surely it's more than mere posturing.

E.L. Doctorow, a famous novelist, perpetrates in the pages of the New York Times a close cousin to the pundit's fallacy. Mr Doctorow offers a satirical primer for national ruin, for "unexceptionalism", which of course consists entirely of rightward developments in American politics he personally happens to deplore. Mr Doctorow avoids the fallacy of suggesting that a political programme opposed to these developments would be successful. Yet a related fallacy remains. Mr Doctorow's not very clever conceit is that because America has failed to avoid all those things he finds especially wretched, it has been rendered "indistinguishable from the impoverished, traditionally undemocratic, brutal or catatonic countries of the world". That is to say, America's undoing is a direct consequence of the country having failed to successfully oppose what the author opposes. This is perhaps even more ludicrous than Mr Reich's egocentric plan for Mr Obama's triumph. If one spends just a few minutes looking at indices of human development, economic and political liberty, corruption, level of democratisation, and so on, one finds America rates rather highly. Despite America's many egregious failings, it is rather harder to distinguish it from the rich, democratic, gentle or vigorous countries of the world. If America has become a plutocratic, jackbooted, war criminal, the correct conclusion to draw is that America makes plutocracy, jackboots and war crime look surprisingly decent. The problem with all the things Mr Doctorow laments had better not be that they have turned the country into some kind of authoritarian banana republic, because they haven't. Conversely, if America were to do everything Mr Doctorow enthusiastically favours (I bet he reads Mr Reich with pleasure), it probably wouldn't turn out quite as well as he imagines.

(Photo credit: AFP)

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MITT ROMNEY isn't surrendering the rhetoric of fairness to the president. A CNN piece on Mr Romney's general-election repositioning efforts show him framing Republican priorities as matters of fairness:

“We will stop the unfairness of government workers getting better pay and benefits than the very taxpayers they serve,” the former Massachusetts governor said. “And we will stop the unfairness of one generation passing larger and larger debts on to the next.”

It is all part of a concerted strategy to try to reverse perceived campaign weaknesses for Republicans as the general election campaign launches.

Jamelle Bouie of the American Prospect argues that the purpose of Mr Romney's adopting the language of fairness is to sow confusion:

I doubt this will convince anyone other than true believers, but that’s not the point; the idea is to muddy the waters when it comes to coverage of Romney’s message. By attacking Obama on “fairness,” Romney can force the press to bring a horse race dynamic to the opposing claims—“Mr. Obama says that it’s unfair for multi-millionaires to pay a lower tax rate than middle-class families, but Mr. Romney says that what’s really unfair is the burden of debt.” The issues aren’t actually sorted out, and Romney walks away with minimal scrutiny.

May the good Lord strike me dead if I'm a conservative "true believer", but I happen to agree with Mr Romney that it is unfair for government workers to be compensated more lavishly than their private-sector counterparts. People who are equal in all relevant respects ought to be treated equally, and it's unfair if they aren't.

Rather than deny the fact of unequal compensation, as progressives seem wont to do, I think they would do better to argue that this bit of unfairness ought to be addressed by ensuring that private-sector employees enjoy equally generous wages and benefits. The reason public-sector employees do so well, the argument should go, is that labour unions really work. The enviable economic security of government workers proves unionisation works. Private-sector workers suffer in comparison because the long Republican jihad against private-sector unionisation has succeeded. Mr Romney isn't wrong that there is an inequality between private- and public-sector workers, or that this inequality is unfair. His appeal to fairness in this case seems so shady because Republicans are the ones who made things unfair. To suggest that this can be put right by also stripping public workers of the protections of unionisation is just perverse. Or so one might argue.

Perhaps it would be better to say that Mr Romney is insincere about fairness, but I don't think this is called for, either. There is obviously a deeper question about fairness here, a question about about the role of labour unions in ensuring fair compensation. Republicans and Democrats tend to disagree about this, and I think they disagree honestly. I think Mr Bouie is correct that Mr Romney's fairness talk will lead to an "equal time" dynamic in the media, but I don't think there's anything wrong or obfuscatory about it. The media ought to try to tease out and clarify the lines of sincere disagreement. I can see how this might seem annoying to a Democrat who felt certain that Democrats truly and deeply care about fairness, while Republicans only pretend to care. But Republicans care, too.

So while I think Mr Bouie's idea that Mr Romney is trying to muddy the waters is interesting, there's an alternative interpretation that is simpler, more persuasive, and more charitable: people disagree about fairness. When we try to fairly account for the disagreement, it may not be so clear who's right. 

(Photo credit: AFP)

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