Kevin Drum - August 2011

Yet Another Look at Texas

| Wed Aug. 24, 2011 8:09 PM EDT

Hey, it's Texas Miracle time again! The latest analysis comes from Goldman Sachs, which concludes that Texas is indeed a positive outlier when it comes to employment. In the chart on the right, where the gray blob represents the normal range of state employment, Texas is the gold line just above the normal range. That's good news for Texas, but sadly, it's where the good news stops for Rick Perry's claim to economic superstardom. The report concludes that three factors are overwhelmingly responsible for good employment performance over the past three years:

  • Lack of a housing bubble. Texas really does have something to teach us on this score — namely that sensible government regulation of the mortgage market is a pretty good idea — but this is not exactly something Perry is eager to preach about. (And he wasn't responsible for it anyway.)
  • An oil industry. 'Nuff said. Lucky is lucky.
  • Lots of high-end services and technology. Actually, I suspect Texas has done fairly well on this score over the past decade, but it's still not a leader of the pack. Texas-wise, housing and oil are the big story here.

And what wasn't responsible for strong employment performance? Here's the list:

  • State income tax rates
  • State property tax rates
  • State spending as a share of the economy

Goldman analyst Zach Pandl's conclusion:

For the national economy we see two main lessons. First, because housing and mortgage credit are central to the weakness around the country, these issues should probably continue to receive attention from policymakers. Second, because the outperformance of a few states is closely related to natural resource exposure it is not easily replicable elsewhere.

Roger that. Fix the housing mess and — well, that's about it, unless we suddenly discover oil in Arizona and Florida. Since that's not likely, how about if we just focus on the housing mess instead?

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Something in the Water at National Review?

| Wed Aug. 24, 2011 3:35 PM EDT

John Derbyshire responds to my post about science yesterday:

I see from that Kevin Drum piece that our own Kevin [Williamson] linked to, that at least one liberal has already sold the pass, or at least half of it, on the heritability of intelligence. (Though Drum, along with the rest of liberaldom, is still clinging for dear life to the dubious Turkheimer paper I had some words for here.) What price, then, those grand liberal plans to Fix The Schools, Kevin (Drum)?

These National Review guys sure are weird. I'm pretty sure that none of them read me regularly — and there's no reason they should — but first Williamson and now Derbyshire seem awfully sure that they know all about me anyway. What's the deal with that? Liberal I may be, but I've been writing about the genetic basis of cognitive traits for years and have been a skeptic of school reform plans nearly as long.1 They can disagree with me all they want, but if they're going to do any more than that they should at least have the courtesy of figuring out what I actually think about stuff.

1Though I am a fan of intensive early interventions.

Helping the Environment by Cutting Spending

| Wed Aug. 24, 2011 2:22 PM EDT

Michael Grunwald commends to our attention the latest release of the Green Scissors report on "wasteful and environmentally harmful spending":

[The report] is practically a laundry list of my governmental pet peeves. The groups share my contempt for corn ethanol, “the granddaddy of wasteful alternative fuels,” as well as farm subsidies in general and a particularly egregious giveaway to Brazilian cotton farmers in particular. They also tee off on my favorite bureaucratic target, the Army Corps of Engineers, singling out my favorite Corps flood-control boondoggle, my favorite Corps lock expansion boondoggle, and an equally egregious Corps boondoggle that I don’t even joke about, because it’s wasting more than a billion dollars just a stone’s throw from the flimsy Corps levees that failed during Hurricane Katrina.

We’re also on the same page when it comes to the nuclear industry’s cradle-to-grave government support, as well as those ridiculous rural airport subsidies that Congressman John Mica took hostage during a recent standoff with Senate Democrats over FAA funding. Unfortunately, the hostages didn’t get shot this time.

Green Scissors is an amalgam of liberal, conservative, and good-government groups, and you won't likely agree with every one of their recommendations. But after skimming through the report I found a lot to like. They claim to have found $380 billion in wasteful spending over five years, and even if only half of their recommendations are worthwhile that still amounts to nearly $40 billion per year. The entire report is here. The table below shows just their targeted cuts in fossil fuel subsidies. They've also got sections for nuclear energy, alternative energy, agriculture, transportation, and land management. Bon appetit.

Putting a Stake Through the Retirement Age Zombie

| Wed Aug. 24, 2011 12:28 PM EDT

A few days ago I wrote about the perennial popularity of raising the retirement age for Social Security and Medicare. It's a bad idea that doesn't save very much money, is savagely unfair to the poor, and in the case of Medicare, does nothing to rein in cost growth, which is our biggest problem. But it's an easy sound bite, so it sticks around forever even though there are loads of better ways of addressing entitlement spending.

Here's a nice little chart from CBPP (based on data from the Kaiser Family Foundation) that illustrates this for Medicare. Here's what it shows:

  • If the Medicare eligibility age were raised to 67, it would produce net savings of $5.7 billion. That's a whopping 1% of total Medicare spending. The reason the number is so low is that a lot of 65-66 year-olds would end up on Medicaid or in Obamacare's subsidized healthcare exchanges. The feds pay either way.
  • But wait! Although the federal government would save a bit of money, employers would end up spending $4.5 billion more and seniors themselves would spend $3.7 billion more.
  • In the end, the federal government would end up with only tiny savings, and those savings would be more than made up by higher spending elsewhere. The net effect on the healthcare system as a whole would be an increase of $5.7 billion, not a decrease.

This is just a bad, bad, zombie idea. It might be worth arguing over the methodology here if the numbers were big enough to matter, but they aren't. Even in the best case, raising the Medicare eligibility age would have an insignificant effect on the federal budget.

The more time we spend on this, the less time we're spending on ideas that might actually accomplish something. It's time to move on.

Check Your Blood Pressure!

| Wed Aug. 24, 2011 11:51 AM EDT

Via Atrios, I see that doctors in Britain want to change the way they measure blood pressure:

More than a quarter of patients may have been misdiagnosed for high blood pressure, a finding that will see the way doctors identify hypertension changed for the first time in more than a century....Currently patients have a number of appointments to have their blood pressure checked, and it is estimated that 25% suffer from "white-coat hypertension" — a syndrome in which people show elevated blood pressure in a surgery or hospital but nowhere else.

....Although there is no debate over the existence of white coat syndrome, some researchers argue that even mild exercise can influence readings and patients should be at home when an assessment is made.

I can vouch for both of these. I have mild hypertension,1 but it turns into severe hypertension whenever I'm in a doctor's office: my blood pressure routinely registers 20 points higher there than anywhere else. The effect is so reliable that I don't even react anymore when attendants record my blood pressure before a visit and produce their usual startling results. Likewise, I discovered years ago that if I walked up to the local drugstore, my blood pressure registered 10-15 points lower on their machine compared to readings after driving over.

The British answer, apparently, is to make people wear a blood pressure monitoring system for a full day. My answer is to own a blood pressure monitor that's been checked and calibrated by my doctor. This works great and it only cost 50 bucks. But it only works great if you actually use it, and I guess that's a common problem. Perhaps 24-hour blood pressure boxes are in all our futures.

1Nicely controlled at the moment, thanks for asking.

Quote of the Day: The Education Swamp

| Wed Aug. 24, 2011 10:29 AM EDT

From Felix Salmon, refereeing a skirmish in the ed wars between Steven Brill and Diane Ravitch:

As a general rule, anybody who thinks that anything about education reform is “simple and obvious” is wrong.

Words of wisdom. It's not unions, it's not teachers, it's not the curriculum, it's not funding, it's not charter schools, it's not poverty, it's not testing, and it's not poor parenting. It's all those things. Anyone who gets too obsessed with only one or two pieces of the ed system is just guaranteeing that they'll never understand what's going on.

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Jobs, Jobs, Jobs

| Tue Aug. 23, 2011 11:18 PM EDT

Karl Smith points out today that, even during the depths of the Great Recession, we were wealthier than we were in the '90s; we consumed more than in the '90s; and we had more average net worth than in the '90s. So why do we all feel so crappy about things? Answer: because one thing we aren't is more secure in our jobs than in the '90s. A lot more of us are unemployed, a lot more of us are underemployed, and a lot more of us who still have jobs are afraid that we might be next:

Lack of jobs is why everyone feels bad, not because they have less or are poorer or the country isn’t producing or consuming as much. And, not to get too meta — in what I hope is an easily readable post — but an economy that makes lots of people feel bad is by definition a bad economy.

Moreover, the feeling that you have now about the economy is not the feeling of lack of value creation. It's not the feeling of socialism....[In a socialist economy] it's not that you are afraid of losing what you have or that budget constraints are pinching. It's that the stuff which is available to you sucks. It — in extreme cases — is a world where everyone has a job but where no grocery store has fresh milk. It’s a world where everyone gets a pay check but no one can find shoes that fit.

....The Great Recession: that’s a problem with jobs, with labor. And, it's very different in kind. When we think about what’s going wrong here and how to fix it, we have to keep that squarely in mind.

All true. But I'd point out one other thing that's worse than it was in the '90s: household debt. The chart on the right shows total household debt as a percentage of GDP, and as you can see, it's come down a bit since its peak in 2008. Still, it needs to drop by about a sixth just to get back to its long-term trend line, and it needs to drop by a full third to get back to the same absolute level as 1995. Even with interest rates low, that kind of debt overhang makes people feel very bad indeed, and puts a serious crimp in their ability to buy goods and services.

Still, point taken. There's not that much intrinsically wrong with the fundamentals of our economy. In the immediate term, we don't have big worries about inflation or government debt or technological stagnation. We need to deleverage, and once we do that people will start to spend again. Regardless of our longer-term prospects, we should be addressing this much more vigorously—and in the meantime, our focus should be on monetary and fiscal stimulus focused on getting people back to work. It's criminal that we aren't doing it.

Three Cheers For Percentages

| Tue Aug. 23, 2011 6:46 PM EDT

Just for the record, I want to say that I love the headline atop the stock market story on the right. Not because the market is doing well, but because it says, simply, that stocks are up "3 percent."

Not that the Dow Jones was up 322 points. Or the S&P was up 38 points. Or Nasdaq was up 100 points. None of which means a thing to non-experts. Just a nice, simple "3 percent."

I'd like this to become the new standard for nonspecialist publications. On first reference, and in headlines, describe market ups and downs in percentage terms. Then provide the exact numbers later in the text. Everyone would get used to this really fast, and it would convey the rough magnitude of the change way better than raw numbers. Who's with me?

Obama's Books

| Tue Aug. 23, 2011 6:05 PM EDT

The Obama family's book consumption is in the news. Obama's own vacation reading list is still highly classified, but:

It was unclear which books Obama ultimately purchased at Bunch of Grapes, but “Brave New World” was most likely for his 13-year-old daughter, Malia. The book is required reading for eighth-grade students at Sidwell Friends School, where she attends.

Huh. I'm trying to remember when I read Brave New World. Seems like it was my junior year in high school. But no. That can't be right. Junior year was American Lit. Must have been senior year.

Anyway: high school, at any rate. And it seems like a high school kind of book to me. But not anymore, I guess. Just goes to show how advanced kids are these days compared to the benighted era I grew up in.

In other news, I'm sort of shocked to see that I've read 8 of the 24 books that Obama is known to have read since he was inaugurated. I thought he had better taste than that. I remember once seeing a list of 50 or a hundred books that Bill Clinton had plowed through in the previous week (or whatever) and finding only one or two that I'd read. Obama is slumming.

The Ever-Changing Science of Global Warming

| Tue Aug. 23, 2011 4:42 PM EDT

Speaking of science, Brad Plumer points out today that scientists do change their minds from time to time. That's science! And they've been changing their collective minds on global warming recently too:

Much of the climate science that’s been published since 2007 appears to have strengthened the consensus, not weakened it. A report published last May by Britain’s Met Office, looking at more than 100 peer-reviewed post-IPCC studies, found that the case for human influence has been bolstered: “We can say with a very high significance level that the effects we see in the climate cannot be attributed to any other forcings.”

Similarly, at last year’s annual American Association for the Advancement of Science meeting, UC Santa Barbara’s William Freudenberg gave a presentation finding that, “New scientific findings are found to be more than twenty times as likely to indicate that global climate disruption is “worse than previously expected,” rather than “not as bad as previously expected.” ”

Anyone who reads this blog regularly already knows this, but as climate models have gotten better the consensus estimates of future warming have been going up, not down. A rise of 2°C over the next century is now a certainty, 4°C is pretty likely, and 6°C is hardly out of the question. And anyone who thinks 6°C isn't something to at least consider insuring against just isn't paying attention.