Kevin Drum - January 2011

Power, Baby, Power

| Sat Jan. 22, 2011 7:34 PM EST

Tim Lee says that American liberalism has incorporated libertarian critiques at a striking rate over the past few decades:

Libertarians have had a pretty impressive winning streak in recent decades, especially on economic policy. Income tax rates are way down. Numerous industries have been deregulated. Most price controls have been abandoned. Competitive labor markets have steadily displaced top-down collective bargaining. Trade has been steadily liberalized....This isn’t to say there are no longer disagreements about economic policy; clearly there are. But what’s striking is that the left’s smartest intellectuals and policy advocates now largely make their arguments from libertarians’ intellectual turf.

He's right! And there are both benefits and drawbacks to this. Still, Will Wilkinson points out that liberals and libertarians remain pretty far apart. So far apart, he says, that most liberals won't even accept this third-best not-even-very-libertarian proposition:

It’s best to just maximize growth rates, pre-tax distribution be damned, and then fund wicked-good social insurance with huge revenues from an optimal tax scheme.

Will is right too! I don't accept this. I think there are two big problems here.

First, it contains an implicit conviction that libertarian notions of tax and regulatory structures will maximize growth rates. This is practically an article of faith on the right, but there's virtually no empirical evidence to support it. As it happens, I'd argue that my preferred brand of the modern mixed economy is, on the whole, probably more efficient than a stripped down libertarian state, even one that includes lots of centrally-directed income redistribution. But not by much. Personally, I'd be pretty happy if both sides accepted the notion that within a fairly wide range of modern capitalist systems — from Sweden to the U.S., say — overall growth rates change very little. For the most part, we're really arguing about other things.

Second, I suspect there's no feasible path to Will's state of the world. The problem is that a system that generates enormous income inequality also generates enormous power inequality — and if corporations and the rich are allowed to amass huge amounts of economic power, they'll always use that power to keep their own tax rates low. It's nearly impossible to create a high-tax/high-service state if your starting point is a near oligarchy where the rich control the levers of political power.

I am, fundamentally, old fashioned about this stuff: I think of the world as largely a set of competing power centers. Economics matters, but power matters at least as much, and I think that students of political economy these days spend way too much time on the economy and way too little time on the political. This explains, for example, why I regret the demise of private sector labor unions. It's not because I don't recognize their many pathologies, or even the fact that sometimes they stand in the way of economic efficiency. I'm all in favor of trying to regulate the worst aspects of this. But large corporations have their pathologies too, and those pathologies are far worse because there's no longer any effective countervailing power to fight them. Unions used to provide that power. Today nobody does.

So when Tim Lee writes that "Competitive labor markets have steadily displaced top-down collective bargaining," I just have to shake my head. Competitive for whom? For the upper middle class, labor markets are fairly competitive, but then, they always have been. They never needed collective bargaining to begin with. For everyone else, though, employers have been steadily gaining at their expense for decades. Your average middle class worker has very little real bargaining power anymore, and this isn't due to chance or to fundamental changes in the economy. (You can organize the service sector just as effectively as the manufacturing sector as long as the law gives you the power to organize effectively in the first place.) Rather, it's due to a long series of deliberate policy choices that we've made over the past 40 years.

It's worth noting, by the way, that corporations and the rich know this perfectly well, even if lots of liberals have forgotten it. They know exactly what the biggest threat to their wealth is, and it's not high tax rates. This is why the steady erosion of labor rights has been, by far, their single biggest obsession since the end of World War II. Not taxes, unions. If, right now, you were to offer corporations and the rich a choice between (a) passage of EFCA or (b) a return to Clinton-era tax rates on high incomes, they wouldn't even blink. If you put a gun to their head and they had to choose between one or the other, they'd pay the higher taxes without a peep. That's because, on the level of raw power, they know how the world works.

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Who Wants to Repeal Healthcare Reform?

| Sat Jan. 22, 2011 1:10 PM EST

Via Greg Sargent, I see that the New York Times decided to go the extra mile and do more than simply ask people if they support or oppose the healthcare reform law. They first asked them if they wanted the law repealed, and if so, what part they wanted repealed. The basic result was 48% in favor of keeping the law as is, 18% who wanted to repeal part of the law, and 20% who wanted to repeal the whole thing. The details look like this:

So 8% are opposed to everything and 11% are opposed to the individual mandate. And that's about it. Not a single other provision was opposed by more than 1% of the respondents. Not even higher taxes! Hell, a full 14% were supposedly in favor of repeal but couldn't name even a single provision they disliked.

It's true that most people don't know anything about anything. So this isn't exactly man bites dog news. Still, with general opposition this small and this amorphous, and specific opposition limited almost entirely to the mandate, Democrats really shouldn't have such a hard time selling their side of this. It's yet another piece of evidence that, like it or not, healthcare reform is here to stay.

A Near Death Experience for the Death Penalty?

| Sat Jan. 22, 2011 12:21 PM EST

Trouble in death penalty land:

The sole American manufacturer of an anesthetic widely used in lethal injections said Friday that it would no longer produce the drug, a move likely to delay more executions and force states to adopt new drug combinations....No other American companies manufacture the drug, which has largely been supplanted by alternatives in hospitals but is used by 34 of the 35 states that use lethal injection to carry out the death penalty....During what had been described as a temporary halt to production last year, scarcity of sodium thiopental led to delays in scheduled executions in at least two states, California and Oklahoma.

I oppose the death penalty on pragmatic grounds (it's too expensive) and moral grounds (it's pretty obvious that we aren't able to apply it fairly), but it's never been a huge hot button for me because I've never thought that it's inherently barbaric or wrong. That said, some of the best evidence that most of us feel pretty queasy about the whole thing is the idiocy of lethal injections. Frankly, if the whole process is so unbearable that hangings and electric chairs and firing squads and gas chambers are all beyond the pale, then maybe it really is inherently barbaric. And if that's the case, we shouldn't kid ourselves that recreating a sterile hospital environment makes it any less so.

Besides, it's still the case that putting someone to death is a mind-bogglingly expensive and convoluted process; we plainly aren't able to apply it fairly; and alone among punishments it's impossible to reverse if and when a mistake is discovered. That's reason enough to end the practice, and hopefully the end of sodium thiopental will prompt at least a few states to bring an end to the death penalty too.

Decluttering the Blogosphere

| Sat Jan. 22, 2011 11:59 AM EST

The bandwagon effect has always been with us, but OTB's James Joyner complains today about the baleful tendency of popular aggregators like Memeorandum to supercharge the herd instinct:

Regardless of how it happens, though, the result is the same: Everyone in a given niche winds up feeling obligated to weigh in. Indeed, I frequently see a headline or story somewhere, decide it’s not worth my time, and then get drawn into it hours later when I see conversations about it on Twitter or my blog feed reader. Sometimes, it’s just a function of “well, this must be important so let me say something.”

I have a solution: don't do it! If it's not something that you personally care much about, just skip it. I, for one, would actually enjoy the blogosphere more if fewer people repeated the same things over and over, and in particular I'd pay more attention to OTB if it had fewer posts. I can't read 20 or 30 posts a day on a single blog, which means that I probably miss lots of good stuff that gets lost in the clutter.

So let's make 2011 the year of decluttering in the blogosphere. Now if I can just figure out a way to get this meme to catch on.

Friday Cat Blogging - 21 January 2011

| Fri Jan. 21, 2011 3:06 PM EST

On the left, here's a good picture of Domino's stubby front legs. Or is it something else at work? In any case, when she walks she definitely slopes up toward the rear, which you don't normally see in a cat. On the right, here's another shot from the series of pictures of Inkblot and the laser pointer that I took a couple of weeks ago. Why? Because you can never get enough of cats and laser pointers. Note also that he's sitting on a cheap area rug that we originally bought to protect a high-traffic area of the carpet. It's almost literally in shreds now because Inkblot has adopted it as his personal scratching post. But I'm basically OK with this. It only cost twenty bucks, and if it lures him away from the furniture and the carpet, that's fine. I'll just buy a new one every six months or something

Chart of the Day: Done By 40

| Fri Jan. 21, 2011 2:51 PM EST

Brad DeLong is surprised by this chart:

I suspect this is surprising only to people like Brad and me (and most of our readers): that is, college educated, white collar workers who make pretty good incomes and work in jobs where continual lifetime advancement is the norm. But that's definitely not the norm for the vast majority of the country. If you work as a truck driver or a waitress or an accounts payable clerk, then by the time you're 40 you've peaked out. Your job pays what it pays, and once you've accumulated a few years of experience you make as much as you're ever going to make. It's a different world from the one lived in by the upper middle class, and unfortunately, it's an increasingly foreign one to a lot of us.

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Jeffrey Immelt? Seriously?

| Fri Jan. 21, 2011 2:36 PM EST

I'm trying to figure out if I should care about this:

President Obama announced Friday that he is forming a new economic advisory council and hailed the business leader he has appointed to head it, General Electric chief executive Jeffrey Immelt, as an innovator who can advance its core mission of promoting job creation and competitiveness.

On the one hand, Immelt is already on the existing version of this board, and it doesn't seem to be a very influential position anyway. So if Obama wants to suck up to the business community by appointing Immelt chairman, there's no real harm done.

On the other hand, seriously? The head of General Electric? A company that long ago became as much shadow bank as industrial manufacturer? A company that was right at the center of the 2008 financial meltdown? A company that was part of the TARP bailout? Mike Konczal points us to Raj Date's paper last year about the potential impact of the Senate financial reform bill:

Considering the “Killer G’s” — Goldman Sachs, GMAC, and GE Capital — can be especially instructive. Their business models are quite different from each other, but they share crucial common features: each was a shadow bank that ex-ploited a regulatory loophole to avoid bank holding company supervision; each took on substantial credit or liquidity risk during the bubble; each faced the possibility of catastrophic capital or liquidity shortfalls; and each was deemed too big to fail and rescued by taxpayers.

....GE Capital is the most instructive example in this category. The firm, a major subsidiary of the giant industrial conglomerate General Electric, is one of the largest U.S. shadow banks, and had more than $620 billion in assets at the end of 2007. Because of GE’s high-quality credit rating, GE Capital was able to satisfy most of its immense borrowing needs, during the bubble, in the capital markets. As the crisis developed, and capital market conditions tightened, GE leaned heavily on both Fed and FDIC emergency liquidity programs.

[Etc.]

Substantively, the Immelt appointment probably doesn't matter much. But symbolically? It's hard to imagine a much worse choice. Was Joseph Cassano not available or something?

Abortion and Race

| Fri Jan. 21, 2011 1:56 PM EST

Peter Kirsanow is upset that the U.S. Commission on Civil Rights refuses to discuss an explosive topic:

Black Abortions: The Forbidden Topic

....Nearly one out of every two black pregnancies ends in abortion. Blacks account for more than forty percent of all abortions in America, a rate that dwarfs that of any other race. Does anyone doubt that if such disparities existed on other serious issues, advocacy groups would be clamoring for hearings? Why the silence? Are some lives less valuable than others?

I don't know if that statistic is correct. For now, I'll take his word for it. Nor did I know that the Civil Rights Commission is forbidden by law from addressing abortion — though I can certainly imagine why it might be.

But exactly which advocacy groups does Kirsanow think should be clamoring for hearings? Feminist groups? They think abortion is OK, so there's no reason for them to be concerned if one group has a higher abortion rate than others. Civil rights groups? Only if they think high abortion rates are somehow unfair to blacks. Conservative groups who don't think anyone should be allowed to get an abortion? Bingo.

Meh. If you don't like abortion, fine. We'll all be arguing about this until we go to our graves. But trying to race bait the issue? That's pathetic.

And while we're on the subject, if you want to know which states make it easier and which states make it harder for women of all races to get abortions, check out our interactive map here.

Smoke and Mirrors

| Fri Jan. 21, 2011 12:54 PM EST

What's the deal here? Yesterday Greg Mankiw observed that increasing spending by $1 billion and increasing taxes by $3 billion might technically reduce the deficit, but it's all just a bunch of fakery. It's really only the tax increase that does any deficit reducing. Today Charles Krauthammer takes up the same banner:

I've got a great idea for deficit reduction. It will yield a savings of $230 billion over the next 10 years: We increase spending by $540 billion while we increase taxes by $770 billion....This is a hell of a way to do deficit reduction: a radical increase in spending, topped by an even more radical increase in taxes.

Did conservatives meet on Wednesday and decide that this should be their latest brilliant talking point for use on Fox and Friends? Look: the CBO says that healthcare reform will reduce the deficit because the money it raises added to the money it saves is greater than the amount of new money it spends. You can argue with this — though it would be nice if conservatives would do it honestly instead of endlessly recycling the same clumsy lies — but that's what the CBO says. The bill reduces the deficit.

And, yes, it also raises spending. Is this really a surprise? We've spent the past two years yelling at each other about this, after all. Of course it raises spending. That's the whole point. We're covering more people and expanding access to healthcare. If you don't like the idea of more people having access to healthcare, that's fine. Just say so. But if you do like the idea, it's not going to be free no matter how much smoke and mirrors you use to confuse things. No free lunches, guys.

Now, I'll concede one point to our conservative friends. Liberals have recently taken to suggesting that anyone who voted against healthcare reform is obviously a hypocrite about deficit reduction, since they voted against a bill that reduces the deficit. This is nonsense. PPACA, at best, reduces the deficit only slightly, and there are plenty of reasons for conservatives to dislike it even if it does, in the end, reduce the deficit a bit by raising taxes to cover its costs. If Mankiw and Krauthammer want to complain about that, I'll back 'em up.

But they should also be willing to concede the more important point: Democrats were basically pretty honest about funding PPACA. It's not, and was never intended to be, a deficit reduction bill. It's a healthcare reform bill. But it's a healthcare reform bill that largely pays for itself, and, by the standards of Washington politics, does it remarkably honestly. Hell, it could have passed months earlier and with a lot more goodies if Democrats hadn't been so obsessed with making sure it was properly funded. PPACA is, in fact, the most honestly funded major bill in at least the last decade, and probably in the last two decades. Does anyone care to seriously debate that?

And one more thing: there's a silver lining here. Mankiw and Krauthammer are, tacitly, conceding that tax increases reduce the deficit. Progress!

Congressional Gameplaying

| Fri Jan. 21, 2011 11:50 AM EST

Yesterday I suggested that maybe Senate Dems should go ahead and put up a big public fight over repeal of healthcare reform. Sure, they could spend their time trying to pass bills to nationalize the coal mines or set up reeducation centers for tea party members, but they'd just get filibustered anyway, so why bother? Why not spend the next month forcing Republicans to take embarrassing votes on amendments to put the Medicare donut hole back in place, or to let insurers turn down people with preexisting conditions instead?

Well, Ezra Klein had a good question about that: "As a general point, I think 'making people take semi-embarrassing votes' is vastly overrated in American politics. Can anyone think of a campaign that even partly turned on one of these gambits?" Jonathan Bernstein agrees. But Barry Pump dives into the literature and says that while it's hard to tie a specific election result to a specific roll call vote, maybe that doesn't matter:

Finally, and I think this is the most important factor, both Mayhew and Arnold argue that members of Congress believe that voters are retrospective, so whether they are or not is besides the point. They structure voting situations because they think campaigns and elections may turn on certain roll calls....Now, is that position overrated? Well, some research suggests so. But another response could be, for the reason above, who cares if it’s overrated? When the legend becomes fact, print the legend.

Pump also points to Bart Stupak as a possible example of someone who was undone by a roll call vote, and I suspect you could come up with some other examples in swing districts too. But whether this strategy works or not, Brian Beutler reports that apparently Senate Democrats are looking at it pretty favorably:

A top Democratic aide tells me that leadership staffers are considering ways to make Republicans take tough votes on popular elements of the bill, as Republicans figure out if and how they'll force a vote on full repeal.

Nothing's been finalized, including precisely how they'd go about it. But the point would be to turn a global health care repeal push into something more piecemeal — should seniors pay back their $250 doughnut hole check? Should children with pre-existing conditions be stripped of insurance?

"Senior staff are giving serious consideration to the strategy of forcing Republicans to take tough votes on extremely popular elements of the health care law, including the doughnut hole provision, as well as pre-existing conditions," the aide said.

Well, why not? Maybe it'll work, maybe it won't. Probably it won't, especially so long before an election. But Republicans have made it clear that they don't plan to do any serious legislating until they're finished holding timewasting symbolic votes in a desperate effort to assuage their tea party base, so why not give it a try? At the very least, maybe it will send a message to the GOP leadership that two can play at dumb legislative games.