Social Science is Hard

Via Dan Drezner, Nature defends federal funding of the social sciences and gets this part exactly right:

Because they deal with systems that are highly complex, adaptive and not rigorously rule-bound, the social sciences are among the most difficult of disciplines, both methodologically and intellectually....So, what has political science ever done for us? We don't, after all, know why crime rates rise and fall. We cannot solve the financial crisis or stop civil wars, and we cannot agree on the state's role in systems of justice or taxation. As Washington Post columnist Charles Lane wrote in a recent article that called for the NSF not to fund any social science: “The 'larger' the social or political issue, the more difficult it is to illuminate definitively through the methods of 'hard science'.”.

In part, this just restates the fact that political science is difficult. To conclude that hard problems are better solved by not studying them is ludicrous. Should we slash the physics budget if the problems of dark-matter and dark-energy are not solved? Lane's statement falls for the very myth it wants to attack: that political science is ruled, like physics, by precise, unique, universal rules.

The public commonly thinks of disciplines like physics and chemistry as hard because they rely so heavily on difficult mathematics. In fact, that's exactly what makes them easy. It's what Eugene Wigner famously called the "unreasonable effectiveness" of math in the natural sciences: the fact that, for reasons we don't understand, the natural world really does seem to operate according to strict mathematical laws. Those laws may be hard to figure out, but they aren't impossible. And once you do figure them out, the rest is mere engineering.1

Hari Seldon notwithstanding, the social sciences have no such luck. Human communities don't obey simple mathematical laws, though they sometimes come tantalizingly close in certain narrow ways — close enough, anyway, to provide the intermittent reinforcement necessary to keep social scientists thinking that the real answer is just around the next corner. And once in a while it is. But most of the time it's not. It's decades of hard work away. Because, unlike, physics, the social sciences are hard.

1Just a wee joke. Settle down.

Mitt Romney in Iowa in December 2011.

Mitt Romney is having a hard time finding businesses that didn't get any help from the government.

Romney has been holding events and making speeches focusing on a set of remarks President Barack Obama made about how government and other people help individuals succeed. The original line Obama used was "If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you've got a business—you didn't build that. Somebody else made that happen."

The Romney campaign has spent the last couple of weeks deliberately ripping Obama's remarks earlier this month out of context, implying that Obama was disparaging business people by suggesting individual initiative has nothing to do with success. As Slate's Dave Weigel writes, conservatives have seized on this misinterpretation as "proof" Obama is actually a secret Marxist. The implication here is really twofold: Obama can't fix the economy because he doesn't understand business, and because "you didn't build that," Obama thinks it's perfectly fine to take from hardworking rugged individualists (like you) and give to a bunch of freeloaders who'd rather not work for a living (like them). 

The problem is that the real-world examples Romney keeps seizing on include people who got help from the government. As ABC News' Jake Tapper reported Monday, the star of a recent Romney ad hitting Obama over "you didn't build that" had received millions in government loans and contracts. Romney stopped in Costa Mesa, California Monday to meet with a "roundtable" of small business leaders, held in front of a sign that says "We did build it!"

Naturally, it turned out that at least two of the companies represented—Endural LLC and Philatron Wire and Cable—had received hundreds of thousands of dollars in government contracts. When Romney visited the Boston's historic black neighborhood of Roxbury last week, Romney touted an auto repair shop, declaring that "This is not the result of government...This is the result of people who take risks, who have dreams, who build for themselves and for their families." Except it turned out that the auto repair shop guy started out without any funds and was only able to build his business because of a bond issed by the local government.

If Romney was trying to prove that businesses only succeed on the backs of Galtian ubermensches with no external help, he's mostly proved the opposite point. But fortunately for the Romney campaign, this particular attack benefits from a widespread American cultural delusion that success has nothing to do with structural advantages and everything to do with individual excellence, or that you can't be proud of your accomplishments if you acknowledge the collaborative efforts of others on your behalf. So even the individuals Romney cited are indignant about the idea that they received help, despite knowing that they did. Jack Gilchrist, the businessman featured in Romney's ad who received millions of dollars in government contracts and loans, simply rationalized it as getting "some of my tax money back." Brian Maloney, the Roxbury businessman who started his auto repair shop with a government loan, told National Journal "We don't need any more of government's help. We haven't had any."

Navy SEALs conduct a capabilities exercise at Joint Expeditionary Base Little Creek-Fort Story during the 43rd annual Underwater Demolition Team (UDT)-Sea, Air and Land (SEAL) East Coast Reunion. The annual reunion started in 1969 and has expanded into a weekend of events, contests, and a SEAL capabilities exercise. US Navy photo by Mass Communication Specialist 2nd Class William S. Parker.

Mitt Romney

In 2009, IRS Commissioner Doug Shulman announced that the IRS had created a new task force to audit people he called "global high-wealth individuals." These new IRS targets, Shulman explained, have tens of millions of dollars in income and assets and "make use of sophisticated financial, business, and investment arrangements with complicated legal structures and tax consequences." They often have an intricate web of related business entities like S-corporations and other pass-through entities they control, along with various off-shore accounts and business entities. In other words, they're people like Mitt Romney.

There aren't that many people in the "global high-wealth individual" group—only about 8,000 taxpayers a year who have more than $10 million in annual income—and Romney is "exactly the kind of taxpayer the program was designed to look at," says Rebecca Wilkins, a lawyer at the Citizens for Tax Justice who used to work with rich clients as a CPA. It's possible for someone with a lot of income, like a corporate CEO, to have a fairly simple tax return, Wilkins says. But Romney's return from 2010 (the only completed one he's released so far) weighs in at 203 pages; 55 pages are simply devoted to disclosing the existence of a host of foreign transactions in tax havens like the Cayman Islands. In his domestic portfolio, there's Romney’s IRA, to which he was legally able to contribute only around $30,000 a year but which is now mysteriously worth between $21 and $102 million. It's the sort of stuff that the new IRS unit is supposed to vet.

Romney's campaign has said he's never been audited. "I pay all the taxes that are legally required and not a dollar more," Romney said during a January primary debate. But IRS audits on Romney's fellow elite global high-wealth individuals have turned up quite a bit of extra money for the government. Out of the 36 high-wealth individuals audited in fiscal 2011 and the first five months of fiscal 2012, the IRS discovered an extra $47 million in taxes that should have been paid by 24 people in that group. Those figures suggest that some mega-rich people using aggressive-but-legal tax avoidance schemes are still not paying all they owe. There's no telling whether Romney deserves an audit or would pass one. But as long as he doesn't release his tax returns, speculation will continue about what's on those returns and whether they need a good look.

Why do we import 4 million gallons of ethanol from Brazil every year and then export 2 million gallons of it right back? Because U.S. ethanol regulations require us to use a certain amount of "advanced" ethanol — i.e., ethanol that produces less carbon than gasoline, which corn ethanol mostly doesn't — but it turns out we're not doing too well on the advanced ethanol front. Our corn ethanol subsidies are so lucrative that this is where all our R&D dollars go. But American ingenuity knows no bounds, so we're meeting the regulation by exporting our crappy corn ethanol to Brazil and receiving their sugar cane ethanol in return. It's all the same, but cane ethanol counts as advanced, so shipping our stuff to them and their stuff to us allows us to meet the minimum requirements for use of advanced ethanol. It all makes sense in a demented sort of way.

This inspiring tale comes from Timothy Wise, who has more details here. Once again, we learn that ethanol subsidies are possibly the stupidest government program ever invented. And that's saying a lot.

Corning International, the company best known for its heat-resistant glass cookware, paid zero federal income taxes on nearly $1 billion in income last year, but apparently that was still too much. Testifying at a House Ways and Means Committee hearing on corporate tax policy on Friday, Corning vice-president Susan Ford asked Congress for "a substantial reduction" in Corning's corporate tax rate.

To be fair, Corning would pay Uncle Sam much more than nothing it didn't resort to arcane accounting maneuvers. Ford told members of Congress that Corning paid a 36 percent income tax last year, but what she didn't tell them is that Corning once again deferred its tax payments. According to the watchdog group Citizens for Tax Justice, Corning has paid zero taxes in the past four years. Between 2008 and 2010, a period in which Corning made $1.9 billion in U.S. profits, Corning actually received a $4 million tax refund.

The hearing on corporate tax policy comes at a time when the White House has proposed lowering corporate tax rates while closing tax loopholes, leveling the playing field for business. The changes are supposed to be revenue neutral, though Corning and other companies seem to want more. "American manufacturers are at a distinct disadvantage to competitors headquartered in other countries," Ford told members of Congress. "Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers."

Except when they don't. In 2011, Corning paid an average foreign tax rate of 17 percent—far more than what it paid in the United States.

Who supports voter ID laws? Obviously, Republicans support them more than Democrats. Since voter ID laws are mostly aimed at suppressing the Democratic-leaning vote, that makes sense.

But there are differences even among voters who identify as either Republican or Democratic. According to a new survey from the Center for Political Communication at the University of Delaware, 53% of Democrats with low levels of racial resentment oppose voter ID laws. Among Democrats with high levels of racial resentment, that plummets to 23%.

Ditto for Republicans. Among those with low racial resentment scores, 13% oppose voter ID laws. Among Republicans with high racial resentment scores, that's cut in half, to 7%.

Racial resentment is measured by responses to only three questions, which makes it a little less robust than we might like. On the other hand, the questions are admirably straightforward. The first one, for example, is this: "I resent any special considerations that African Americans receive because it’s unfair to other Americans." That's pretty clear.

I'm not sure there's anything much we can do with these results. They aren't going to change anyone's mind. But it certainly confirms that race is bound up pretty strongly with the whole voter ID movement.

(Via Steven Taylor.)

After more than a year of failing to find a scandal in the Obama administration's loan to bankrupt solar company Solyndra, House Oversight Committee Chair Darrell Issa (R-Calif.) is now probing whether the Federal Aviation Administration's approval of the Cape Wind project was "politically based."

Issa and Transportation Committee Chair John Mica (R-Fla.) sent a letter to FAA chief Michael Huerta last week saying that they have "significant questions" about the project's approval, based on emails among staff that noted that the project consideration was "political." The letter strongly indicates that the White House might have pressured the FAA to approve the offshore wind project, which would be the first in the nation, as part of its green energy agenda. "A politically based determination of the Cape Wind project by FAA is an unacceptable use of federal authority, contravenes FAA’s statutory mandate, and raises significant safety concerns for aviation in Nantucket Sound," they wrote.

The top-ranking Republicans requested any communication regarding Cape Wind between the FAA, the project developers, and the White House for the last three and a half years by the end of the month. The FAA's approval was necessary to ensure that the 130 turbines in the project didn't interfere with flight paths or radar. 

Cape Wind was first proposed back in 2001 and finally won approval in 2010, after years of political wrangling in Massachusetts. Construction is expected to start next year and begin producing power in 2015. Of course the project was political, pitting big players in the state like the governor and the Kennedys, against each other. But that doesn't mean that the FAA's initial decision to approve it was politically motivated.


Bill Koch at an America's Cup press conference in 1992.

Now that he's given $2 million to the main pro-Romney super-PAC, William Koch has joined his brothers David and Charles as one of 2012's top conservative moneymen. Bill, David's twin, also made much of his money from his family's energy holdings, though he's not quite as rich as his better-known siblings. Forbes puts his net worth at $4 billion, versus his brothers' combined worth of $50 billion, the result of a drawn-out legal battle over the family fortune that left Bill and the eldest Koch brother, Frederick, behind.

Though he's given money to Republicans such as Rep. Allen West (R-Fla.) and has used his company, Oxbow Carbon, to lobby against wind turbines off Cape Cod, Bill has not gotten involved with his brothers' shadowy political fundraising operation. "Bill Koch isn't Charles Koch and he isn't David Koch," his spokesman told the Village Voice. "He's not his brother's keeper."

What Bill Koch does like to keep: Wine and art. According to Antiques and Fine Art, Koch's Florida house has a "computerized wine cellar" that provides "easy access" his collection, whose size has been estimated at somewhere between 35,000 and 43,000 bottles. Koch once believed he possessed bottles of French wine signed by legendary oenophile Thomas Jefferson, but he later claimed they were bogus and sued the dealer and Christie's auction house. Last year, Koch told the Economist that he has spent $4 to $5 million on fake wines. He did not say how much he has spent on his ongoing lawsuits (five at last count) against the alleged purveyors of counterfeit wine.

Koch also has an extensive and eclectic collection of fine art, including works by Monet, Chagall, and Winslow Homer. Not content to let his favorite pieces collect dust, Koch seasonally schleps them to and from his summer home. As AFA explains:

Koch annually chooses artwork from his 400-strong collection to transport from his 40,000 square foot primary residence in Florida to the Cape Cod beach house. At a third of the size, the summer home accommodates only a careful selection. Thus, favorites such as enormous Fernando Botero sculptures, Alfred Stevens's engaging The Coquette, and much of the maritime collection (excluding over 120 boat models of every defender and challenger in the America's Cup), travel north while the majority of Koch's trove stays behind.

Koch's other passion is sailing. In 1992, he won the America's Cup at a reported cost of $68 million. "Financially, I would say win or lose, it's not worth it," he told ESPN. "If you asked me…if I knew what I know now, would I do it, the answer to that would be no."

"Wild Bill" also has a thing for the Old West. In 2010, he quietly purchased Buckskin Joe, a Colorado town/movie set/tourist trap, and relocated its buildings to his ranch. Last June, he spent $2.3 million on the only authenticated photograph of Billy the Kid. That's still $300,000 more than he's spent on Romney, one of his cheaper hobbies.

Mitt Romney isn't alone. The world's wealthiest citizens have socked away a mind-blowing amount of money in offshore tax havens: Likely around $21 trillion, but as much as $32 trillion. That's according to a new report from the Tax Justice Network, a British think tank. To put that in perspective, the combined gross domestic products of the United States and Japan are around $21 trillion.

This gargantuan stash of money belongs to fewer than 10 million people, and $9.8 trillion of it belongs to just 100,000 people, the Tax Justice Network estimates. Here are the countries that are losing the most money to offshore tax havens:*

While offshore tax havens have an image of being operated by shady banks in tropical backwaters, the report found that the majority of the $21 trillion was actually managed by well-known private banks. The three largest tax haven players are UBS, Credit Suisse, and Goldman Sachs. For more on the Tax Justice Network's findings, you can read their full report (PDF).

Correction: The original version of this article stated that the countries in the chart were the top offshore destinations for tax dodgers. In reality, they are the top sources of money sent to offshore accounts in places like the Cayman Islands.