Bloomberg's Catherine Dodge writes today that "the thrill is gone" for young voters who supported Barack Obama in 2008:

Indiana University professor Gerald Wright opened his class on congressional elections by asking students if they saw the previous night’s school-sponsored U.S. House candidate debate a few blocks from campus.

Among almost 60 students, three hands went up.

“Most students don’t care about elections in general,” 20-year-old sophomore Melody Mostow said after the class last week. “In most midterm elections, there’s not that central person for us to rally around.”

Yeah, maybe. But you know what? I wouldn't have watched either. The U.S. Congress is effectively a parliamentary body these days, and it matters only slightly who its actual individual members are. A few extreme cases aside, all that matters is what party the candidates belong to. No one needs to listen to a debate to figure that out.

In any case, I'm willing to bet a million dollars — no, make it a billion — that young voters will turn out this year in roughly the same numbers that they always turn out for midterm elections. The chart on the right from the good folks at CIRCLE shows that youth turnout was up a bit from historical lows in 2006, but the broader trend is that turnout in general has gone steadily down, and a youth turnout rate of 20-22% this year would be entirely average. And that's pretty much what I expect it to be. No thrill needs to be gone to explain this.

From Adam Ozimek:

Our desire to have costs hidden from us is a very expensive preference.

He is reacting to a study showing that CAFE mileage standards are a less efficient way of reducing gasoline use than simply raising gasoline taxes. In the end, we all pay more for CAFE increases than we would if we just accepted the need for higher taxes.

I'll confess that I'm not sure I'm convinced about this specific argument, though it's pretty conventional economics. Largely this is because CAFE standards are more permanent than taxes and don't suffer from the problem that people just get used to them and revert to their old behavior. If CAFE standards are higher, then they're higher forever and gasoline use is reduced forever. Conversely, people react pretty weakly to higher gasoline prices in the short term, and we don't really know all that much about how they react in the long term. So I'd be careful here. Ditching CAFE for higher gasoline taxes may be orthodox economics, but it might have social and political shortcomings even aside from our unwillingness to consider it in the first place.

Still, there's a pretty good chance the study is right, and certainly this argument is right in general. We do an awful lot of inefficient revenue raising in this country because we're not willing to simply raise taxes in a transparent way. Republicans don't seem to have figured this out yet.

Our Old-New Elite

Charles Murray has a long moan in the Washington Post today about the New Elite (his term) and its increasing isolation from "mainstream America." What's weird about it is that its core argument is in this passage:

Get into a conversation about television with members of the New Elite, and they can probably talk about a few trendy shows — "Mad Men" now, "The Sopranos" a few years ago. But they haven't any idea who replaced Bob Barker on "The Price Is Right." They know who Oprah is, but they've never watched one of her shows from beginning to end.

Talk to them about sports, and you may get an animated discussion of yoga, pilates, skiing or mountain biking, but they are unlikely to know who Jimmie Johnson is (the really famous Jimmie Johnson, not the former Dallas Cowboys coach), and the acronym MMA means nothing to them.

They can talk about books endlessly, but they've never read a "Left Behind" novel (65 million copies sold) or a Harlequin romance (part of a genre with a core readership of 29 million Americans).

They take interesting vacations and can tell you all about a great backpacking spot in the Sierra Nevada or an exquisite B&B overlooking Boothbay Harbor, but they wouldn't be caught dead in an RV or on a cruise ship (unless it was a small one going to the Galapagos). They have never heard of Branson, Mo.

Even aside from the threadbare trope that anyone who doesn't follow NASCAR isn't a real American, this is nuts. The Old Elite (my term) of a century ago could talk about Tosca or Mahler, but might not have known what was showing at the Palace Theater or seen an entire Pearl White movie all the way through. They probably knew who had won Wimbledon or what regattas were being held off Long Island, but quite possibly didn't know or care who Jack Johnson was. They chattered about Edith Wharton's latest, but had never soiled their hands with In His Steps or Nick Carter Stories. They toured Europe and summered in Maine, but wouldn't be caught dead at Coney Island.

This is just the nature of elites. Of course they do different things than the teeming masses. If they didn't, they'd hardly be elites, would they?

What's odd about Muray's op-ed, though, is that buried beneath his tired catalog of cultural cliches he touches briefly on something that might actually have been interesting to explore: the changing life patterns of our elites. We've always had hereditary elites, this argument would go, but in the past at least our self-made elites mostly came from common backgrounds. Think Henry Ford or John D. Rockefeller. Today, even our self-made elites typically come from upper-middle-class backgrounds. Think Bill Gates or Warren Buffett. Our modern elite class contains virtually no one who has ever had much contact with the working class.

Now, I don't know if this is actually true. But it would be interesting to take a look and find out. Unfortunately, Murray doesn't bother. Instead, he just stuffs a whole bunch of tired red-blue/heartland-coastal/urban-rural chestnuts into a tattered burlap sack and heaves it onto the Post op-ed page. Blecch.

Via Mark Kleiman, here's an interesting poll result for Proposition 19, the initiative to legalize marijuana cultivation and sale in California. It comes from the pro-19 forces, and I don't have any independent way of knowing how reliable it is, but it shows that standard polling has Prop 19 losing 46%-41%, while automated polling shows it winning 56%-41%.

Take this for what it's worth. I'm basically skeptical that Prop 19 will pass, and I have my doubts that there's really such a large number of people who are afraid to express support for Prop 19 to a live interviewer. Supporting pot legalization isn't really a huge stigma in California, after all. Still, it's interesting if it's legit. We'll find out a week from Tuesday.

California Business

The chart on the right comes from the LA Times. It shows that, despite the endless complaints about California being such a business unfriendly state, our corporate tax take has gone down dramatically over the past 30 years:

California takes about 4.7% of what a business produces in taxes — which happens to be the national average. The government take is higher in Alaska (13.8%), New York (5.5%) and Florida (5.3%). Even Texas, known for rolling out the red carpet for business, pocketed more than California — 4.9%.

That's according to an annual study of the tax burdens in all 50 states by the Council on State Taxation, a business-friendly group led by senior executives of Chevron Corp., General Electric Co. and other major corporations. "California is pretty middle-of-the-pack when it comes to business taxes," said Joseph R. Crosby, the organization's senior director of policy.

Granted, there's more to business friendliness than just taxes. California has more stringent environmental rules than most states, for example. And the article notes that California's corporate tax structure tilts downward: big companies tend to pay fairly low taxes while small companies pay higher taxes. (Thanks, Chamber of Commerce!) Still, most of the griping you hear comes from big companies, and most of it revolves around taxes. But the fact is that their tax bill just isn't especially high.

From Thoreau, who lives nearby and who I really ought to meet someday:

I’m probably just dwelling on the trivialities of my comfortable suburban professional existence, but my basic grievance against big companies is that when they screw up they take 6-8 weeks to fix it, usually after multiple phone calls and whatnot, but if I screw up a penalty is immediately levied. This happens on every scale, from billing snafus with $7 fees, to cases of people being foreclosed on even though they had never missed a payment and spent money on lawyers to prove this, to “Oops, we broke the global economy, could you send $1 trillion to our Nigerian accounts?”

The latest snafus on my end are (1) I’m getting a bill for water service in an apartment that I moved out of, for a billing period that doesn’t overlap my last month in that apartment and (2) I set up autopay with another utility, or at least tried to, something didn’t go through, and now I’m paying a $7 late fee....It’s not the $7, it’s the asymmetry of the responsibility. If I screw up (and I still maintain I did everything necessary for autopay!), I have to pay a late fee. If they screw up, they give me runaround. As long as it’s $7 at stake, fine, but they do this at every level. I think of the hassle I had to go through to get the title for my car after I paid off the loan (early) and I can’t even imagine the hell it must be to have your house foreclosed because of a snafu that they didn’t even notify you of (because of another snafu).

So, I say that we should be able to put large companies on hold when they want something, send them through phone trees, and ask them to re-submit paperwork that we may or may not lose track of.

All in favor, raise your hands. Motion carried! 

Today's installment of catblogging features rare video footage of Domino doing — well, let's be honest: doing something not very exciting. But new! For her. And I just happened to have my camera around when she did it. That's sort of rare, so today you get rare Friday Cat Vlogging.

To make up for the lack of actual excitement in the video, however, note that my personal video creation skills have taken a great leap forward. Unlike my past crude efforts, this one includes a sophisticated opening title and an actual edit with a diagonal transition. Thanks, Microsoft Movie Maker!

In other pet-related news, Chad Orzel is writing a sequel to How To Teach Physics To Your Dog, so he's running a contest that will benefit the DonorsChoose fundraiser to support public school students and teachers. Here's the deal: Chad's book is full of animal characters, and he promises to name one of them after the biggest donor to his fundraising drive. But what if we all made donations in Inkblot's name? Simple arithmetic would make this the biggest donation, and he'd be forced to recognize this and feature Inkblot in his book. Right? I mean, the guy's a physicist, after all. So head on over there and give til it hurts. The kids it will help are all well and good, but this is really for Inkblot. He'll be watching.

From Robert Reischauer, former director of the Congressional Budget Office, talking about Social Security:

It's quite a manageable problem.

Yep. We could solve Social Security for all time in about a day of easy negotiations if both Democrats and Republicans were actually serious about solving it. The required set of benefit cuts and revenue increases would be so minor, and would phase in over such a long period, that virtually no one would even notice.

Too bad we're not serious about it.

Google's Tax Bill

After reading a recent Bloomberg article about how Google reduces its corporate tax rate by shuttling money between Ireland, the Netherlands, and small Caribbean islands, Tim Fernholz wonders if this betrays Google's "Don't Be Evil" motto:

So is this action evil? If Google's definition of not being evil is 'doing more than the average corporation to support the public interest,' then sure it is. It's one thing to take advantage of legitimate tax law, but exploiting these loopholes for the sole purpose of paying less tax violates the spirit of the law, if not the letter. That would be fine if Google was content as a typical business, relentlessly pursuing profit with no thought to the public interest. They simply shouldn't pretend they're somehow better than the Exxons and Goldman Sachs of the world.

Put me down on the "not evil" side. There are, obviously, some tax dodges that are egregious enough to qualify as pretty close to evil. But declaring revenue in whatever country gives you the best tax treatment? No matter how many clever names we make up for this, the fact is that virtually every company with foreign operations does this. It's just routine. Google's motto is "Don't Be Evil," not "Don't Be An Idiot."

More generally, I think that taking full legal advantage of tax laws is rarely unethical. We all do it. I think that the mortgage interest deduction is bad policy, for example, but I never miss an opportunity to declare it. Ditto for any other deduction I can get away with, regardless of how I feel about it from a philosophical point of view. I'd be happy to see the tax code changed, but in the meantime I certainly don't feel bad for refusing to be a high-minded sucker while everyone else follows the actual existing law.

The scandal here isn't that Google is doing what it does. The scandal is that our tax laws allow it. Articles like the Bloomberg piece on Google serve a purpose, but that purpose shouldn't be to pretend that Google is doing anything wrong. The purpose should be to wake people up to how our tax code works. Answer: not very well. If there's any evil here, it's in Congress, not Silicon Valley.

Fixing the Budget

Reihan Salam is unmoved by Michael Kinsley's argument that the country is broke and we need to modestly raise taxes on high earners to fix things:

Before asking taxpayers — any taxpayers — to dig deeper, I’d gently suggest that we look at public bureaucracies. If the Milwaukee Public Schools spend twice as much as choice schools to deliver the same results in terms of reading and math scores, I'd say MPS can dig deeper, ideally by restructuring compensation and giving workers more autonomy. If one-fifth of public dollars spent on infrastructure are essentially wasted, as Barry LePatner argues in his brilliant new book Too Big To Fall, which I'll discuss in greater detail soon, I'd say the bureaucracies we've placed in charge of public construction projects can dig deeper, ideally by doing a better job of sharing data and using life cycle assessments. If we could reduce Medicare expenditures by 8% per year by creating a competitive pricing system, I'd say the federal government can dig deeper by making a commonsense reform that will leave the quality of Medicare unchanged if not markedly improved.

I'm fine with this as a general idea. But let's look at these three examples. (1) There's no magic to cutting school spending. We can do it by paying teachers a lot less and wiping out programs for disabled kids. That might not be as good an idea as it sounds like — and in any case has very little to do with the federal budget. (2) Focusing more on infrastructure maintenance is probably a good idea. But it's hardly a panacea. (3) Competitive pricing reduces Medicare expenditures 8%, not 8% a year. And that's only assuming that the AEI study that produced this number is right.

My point here isn't that Reihan is wrong about making government more efficient. Of course he's not. It's that whenever you dig into this stuff, there's always less than meets the eye. My guess, for example, is that our infrastructure spending ought to go up, not down. We probably need to spend more on maintenance and more on new projects. And reducing Medicare expenditures is a huge problem, not a quick efficiency fix. Efficiency is a legitimate issue, but Medicare's problem is mainly that we pay people too much and demand too much medicine. What's more, proposals like AEI's for increasing Medicare efficiency are all frankly speculative. We should give them a try, but we should also treat them with the same skepticism that we'd treat any untested new idea.

The plain fact is that budget numbers simply never add up without tax increases. Not even close. We took a nice holiday from history for eight years under George Bush, cutting taxes and increasing spending and figuring that everything would come out fine in the end. But it didn't, and the bill is coming due.

How should we pay it? Well, the income of the rich has doubled or more over the past 20 years and their tax rates have gone down. Restoring their old tax rates, which quite plainly didn't produce economic stagnation, is part of the answer. Making government more efficient is a good idea too, though actual ideas for doing this usually stumble pretty badly when anyone tries to put them into practice. And getting Medicare under control is Job 1. But that's sure not going to happen any time soon after the Republican demagoging of Medicare cuts that's marked the current election season.

Tax increases are coming eventually for both the rich and the middle class. It's the only way to make the sums work. And since the rich have seen their incomes rise so much and have benefited the most from tax cuts in the past, their taxes are going to go up more. Nothing else really makes sense.