Israel's Future

Bernard Avishai writes about the steady deterioration of Israel's infrastructure despite respectable economic growth:

In case after case, rightist coalitions have insisted the money was simply not there, and so Western standards for "quality of life" remained out of reach; the country's most responsible citizens have shrugged, more or less, and returned to work, knowing that rates of participation in Israel's workforce is actually among the lowest in OECD nations, around 57%, because of the amount of money supporting ultra-orthodox "learning."

The Carmel brush fires have suddenly given all of this frustration a powerful symbol — a kind of Katrina event. Just who have the governments been serving?

Perhaps the signal moment came on Channel Two Friday evening, when the fires were at their worst, and the newscast's most forceful commentator, Amnon Abramovich, let loose with what a great many in the audience was thinking. "If you are not a settler or a Haredi lobby," he said (I am paraphrasing),"you might as well forget getting anything from the Israeli government in recent years."

I don't know Israel well enough to weigh in on this, but it certainly squares with an awful lot that I've read in recent years. The steady rise of ultra-orthodox influence in Israel seems to be every bit as dangerous to its future as anything happening in the West Bank or Gaza — though the two are so tightly related that I imagine it's hardly possible to speak of them as separate phenomena in the first place.

I'd be interested in comments on this. But for obvious reasons, please be extra careful to keep them civil.

Controlling Healthcare Costs

Yuval Levin thinks that the Simpson-Bowles deficit commission's failure to take on healthcare is its biggest weakness. I agree! But then he goes on to say this:

Obamacare itself cannot just be reformed, because it is deeply rooted in exactly the wrong idea about how to control health-care costs....It puts into practice the notion that the way to make health-care financing more efficient is to make it a centralized system managed largely by the government, so that the only way to really squeeze costs is to tighten price controls.

If you do not think that this is how economic efficiency happens, then you cannot expect any form of this approach to address the basic problem with American health care, and indeed you would expect this approach to result in lower quality and less readily available care.

It's remarkable that conservatives can continue saying stuff like this. Every other advanced country in the world has a centralized healthcare system that largely controls costs via government mandates. And guess what? It demonstrably works. Every other advanced country in the world has significantly lower costs than ours and provides more readily available care, and nearly all of them provide healthcare that's at least as good or better than ours.

The chart on the right has been making the rounds lately, and it shows the healthcare cost situation pretty clearly. We've always been near the top of the pack compared to other countries, but around 1980 U.S. healthcare costs started to explode. While other countries have seen their costs rise about 50% or so over the past 30 years, ours have skyrocketed, nearly doubling as a percent of GDP.

If you break this down, you can try to figure out exactly which costs are responsible for this rise. But the big picture is clear: other countries had centralized systems that controlled costs and we didn't. And the centralized systems worked: they reined in costs while continuing to provide extremely high-quality healthcare. You might not like that from an ideological perspective, but from a practical one you can hardly deny that it worked pretty well.

Incentives and the Business Cycle

Matt Yglesias suggests that it's hard to forge agreement on fiscal stimulus because liberals are afraid that "temporary" tax cuts will be demagogued when liberals try to let them expire and conservatives are afraid that "temporary" spending hikes will be demagogued when conservatives try to let them expire:

At the state and local level, anyone who’s thinking seriously about the issue ought to see that the middle of a recession is a terrible time to implement major cutbacks in public spending. But at the same time, people who believe in good faith that state and local spending is above the optimal level will understandably agree with Rahm Emannuel that you don’t want to let a good crisis go to waste. After all, were center-left Keynesian economics bloggers issuing table-thumping condemnations of state and local spending increases in 2004-2007? Bemoaning the fact that we’d entered a new “dark age” of macroeconomic understanding where policymakers didn’t realize that under the circumstances states and municipalities ought to be trimming its workforce and accumulating huge surpluses? I think I missed that.

I'm not sure this bears close inspection. At the federal level, center-left types fought an entire national election in 2000 based largely on the idea that times were good and the federal government should be accumulating surpluses. It was a pretty big deal, and as you'll recall, we center-lefties lost that election and George Bush proceeded to piss away the surplus and run up more debt than any president in history. On the spending side, center lefties recently passed a big healthcare overhaul that was largely funded by cuts in Medicare spending, and instead of applause for their fiscal sobriety they got hammered for it by Republicans during the 2010 midterms. In other words, on the federal level center-left types have proven over and over that they are willing to be pretty responsible on spending and budgetary issues despite getting clobbered for it. But the opposite isn't true of conservatives and taxes. One need look no further than the national-level dogfight going on right now over the expiration of the deficit-busting tax cuts that originally got George Bush into the White House. No conservative who wants to win reelection even dares consider taking a responsible position on this.

But how are things at the state level? What happens when center-lefties try to restrain spending and build up surpluses during good times? They very quickly learn a harsh lesson: if you accumulate money in a rainy-day fund, conservatives will promptly demand that it be "returned to the taxpayers." That happened here in California as far back as 1978 and was a big reason for the passage of Proposition 13. And if you allow a temporary tax cut to expire, your career might be over. This happened here in California as recently as 2003, when Gray Davis got tossed out on his ear for allowing the car license fee to automatically revert to its old level when the state budget got out of balance. 

Nobody is an angel in this fight, and certainly liberals could do a better job of speaking out for spending restraint during boom times. But conservatives have made it largely pointless to build up federal surpluses or state rainy day funds even when lefties are feeling in a responsible mood. At the same time, conservatives have also made it career-threateningly dangerous to allow even temporary tax cuts to expire. It's true that there's always a steady hum of background pressure from interest groups to maintain spending levels, much of it from the left, but for the most part the really pointed incentives come from the conservative side and simply aren't symmetrical: they always run in favor of tax cuts and against spending restraint.

The whole idea of trying to balance budgets over the business cycle is practically a center-left platitude. The fact that it doesn't happen very often is attributable in small part to basic human nature (nobody likes to restrain spending when money is available) and in very large part to the fact that conservatives flatly won't let it happen.

Terrorism and Fear

Apparently the National Park Service is trying to think of ways to bring a higher level of security to the Washington Monument in order to protect it against terrorist attacks. But Bruce Schneier has a different idea. He thinks we should just shut it down:

Let it stand, empty and inaccessible, as a monument to our fears.

An empty Washington Monument would serve as a constant reminder to those on Capitol Hill that they are afraid of the terrorists and what they could do. They're afraid that by speaking honestly about the impossibility of attaining absolute security or the inevitability of terrorism — or that some American ideals are worth maintaining even in the face of adversity — they will be branded as "soft on terror."

....Terrorism isn't a crime against people or property. It's a crime against our minds, using the death of innocents and destruction of property to make us fearful. Terrorists use the media to magnify their actions and further spread fear. And when we react out of fear, when we change our policy to make our country less open, the terrorists succeed — even if their attacks fail. But when we refuse to be terrorized, when we're indomitable in the face of terror, the terrorists fail — even if their attacks succeed.

I don't have any special opinion about the Washington Monument. Maybe we should just shut it down. But that particular issue aside, I think Bruce's attitude needs some major pushback.

There's a certain class of people to whom his prescription sounds great. Refuse to be terrorized! Stop being such babies! I'm a member of that class. I would happily accept a slightly increased risk of terrorist attack in return for a less intrusive security regime. I think we're way too willing to let fear rule our culture. On a purely personal level, this stuff infuriates me.

But those of us who feel that way really have an obligation to understand just how out of the mainstream we are. I'm willing to bet that most of us are a bit nerdy, sort of hyperanalytical, maybe even slightly Aspergers-ish. We're comfortable — too comfortable, probably — viewing the ebb and flow of human lives as an accounting exercise. We're also very sure of ourselves, generally pretty verbal, and we have soapboxes to shout from.

And, at a guess, we represent maybe 10% of the population. At most.

Fear of violence is not a problem unique to America. It's not a problem with the modern era. It's not a problem of a political class grown suddenly cowardly. Human beings simply value physical security very, very highly. All human beings. They will do almost anything to feel secure from physical threats. Look at Israel. In order to protect themselves from attacks that caused a bit over 200 deaths in the peak year of 2002, they have embarked on a campaign of regular military offensives, a massive wall construction project, the steady takeover of Arab sections of Jerusalem, and a campaign of relentless oppression against Palestinians in occupied territories. Like it or not, that's how people eventually react to campaigns of terror. It's worth a lot not to get to that point.

I need to be clear here. I'm not pretending that our reaction to potential acts of terror has been correct or proportional or anything else. It hasn't been, and our overreaction has been damaging on a number of levels. I'm only saying that we hypereducated types need to at least try to understand how most people react to the prospect of directed violence. If, for example, I hear one more person compare the number of deaths from terrorism to the number of deaths from car accidents, I think I'm going to scream. Human beings react differently to accidental death than they do to deliberate attacks from other human beings. This is human nature 101. If you honestly think that the car-terrorism comparison is persuasive to anyone, you are so wildly out of touch with your fellow humans that there's probably no hope for you.

Liberals lost massive amounts of trust among ordinary voters in the 60s and 70s by not taking crime seriously. The result was catastrophic: a massive overreaction led by conservatives that was made possible because liberals didn't have the credibility to offer any pushback at all. In fact, it was worse than that: for a good many years, liberal opposition to crime measures probably made them more popular. That's what happens when you fall too far out of touch with the lived experiences of everyday people.

So: is airport style security at the Washington Monument an overreaction? Maybe. Constructive alternatives would be welcome. But just telling the little people to suck it up and accept that sometimes people are going to die at the hands of terrorists? That's about the worst, most condescending argument you could possibly invent. It ignores human nature; it ignores the fact that terrorism does, in fact, terrorize; and it ignores the historical reality of what happens when societies are attacked. It's an argument that needs to go away.

POSTSCRIPT: On the other hand, I agree almost entirely with this. Go figure.

Social Security and the Very Serious People

Karl Smith ventures a guess about why elite pundits and analysts obsess so much over Social Security even though its solvency problem is fairly easy to solve. He thinks they obsess over it because its solvency problem is so easy to solve:

I think Very Serious People concentrate on Social Security because they can understand it. The program is relatively simple and the math straightforward. The ultimate driver of most projections — that there will be more retirees than workers — makes sense.

Reasoning about long term health care costs and affects, economic growth rates, global convergence, the importance or lack thereof of skill biased technological change, etc is more difficult and therefore I think people shy away from it.

When giving talks to business leaders and government officials about economics and taxation there is a sudden confidence that comes over them when the subject of Social Security comes up. They immediately feel as if they know the right questions to ask and could even potentially push back on some of the things I am saying. This confidence makes them want to steer the conversation in this direction.

There might be something to this. As pushback, I'd note — and perhaps you've seen this in action yourself? — that opinion mongers don't generally have any problem pushing simplistic solutions to fantastically complex problems. So I'm not sure Social Security's relative simplicity really explains much. On the other hand, it's true that there's a class of problems that are not only hard, but also seem hard to ordinary people, and things like healthcare and globalization might fall into those categories. By contrast, there's a different class of problems that are hard, but seem pretty simple to lots of people. Most foreign affairs problems fall into this category, as do issues of race, crime, and immigration oftentimes. Social Security might actually be in a very rare third category, problems that seem pretty simple and really are pretty simple. (Simple, not easy, as Ronald Reagan was fond of saying.)

Anyway, Prof. Smith was responding to Prof. Krugman, who suggests that elites are gung ho about cutting Social Security as a way of demonstrating seriousness because they themselves don't rely on Social Security and don't know an awful lot of people who do. So they're eager to support things like raising the retirement age. After all, it doesn't much affect those of us who sit on our butts for a living and can retire early anyway because we have plenty of savings.

If I had to guess, I'd say Krugman explains about half the elite response, Smith explains about a quarter, and then there's another quarter explained by pure partisan bile and ideological purity. But that's just a guess.

Friday Cat Blogging - 3 December 2010

I had the bright idea today of doing an Andrew Sullivan-esque "View From Your Window," except it would be a view of my cats through my windows. This worked fine for Inkblot, but unfortunately Domino is a little under the weather today and basically just wanted to curl up in her new favorite chair and sleep. So I let her sleep. On the plus side, her picture gives everyone a nice view of our new carpet, which is this year's major Drum family contribution to stimulating consumer demand. So far the cats seem to approve.

SATURDAY MORNING UPDATE: Domino seems to be back to her old self today. Probably just ate something that didn't agree with her.

We Are Doomed

Former decent person Douglas Holtz-Eakin responds to today's grim unemployment report:

But mostly this is an alarm bell for the lame-duck Congress. No more games — extend all the tax cuts for two years, patch the AMT, and turn to cutting spending and tax reform.

Going forward, Congress has lost the luxury of extended debate on boutique social issues. All focus should be on growth. Every policy should be evaluated for its impact on growth. Wake up.

Ah yes, those "boutique" social issues. Nice phrase there. Well, Doug — I can call you Doug, can't I? — there wouldn't be any extended debate on these social issues if the nitwits in your party would just let them go. So why not tell them to let it go? Likewise, 80% of the Bush tax cuts would have been extended long ago if not for the nitwits in your party. (And, in fairness, a small number of nitwits in my party too.) So why not tell them to take the 80% and move on? Cat got your tongue or something?

But that's nothing compared to your call for spending cuts. Seriously? Spending cuts? That's the policy you think is vitally necessary for economic growth? Spending cuts? Because — what? Unemployment is too low for your taste? God save us.

Replaying Their Worst Moments

Non-insane conservative Dan Drezner points out that even if repeal of DADT has some modest and temporary negative effects on things like unit cohesion and combat readiness, the status quo is having way bigger negative effects:

I therefore really and truly don't give a s**t why John McCain's position has shifted. I just want to know why the ranking minority member of the Senate Armed Services committee is throwing national security, civilian control of the military, and the hierarchical chain of command under the f***ing bus. John McCain is weakening the institution he claims to love the most. I don't care why he's doing it — I just care that he's doing it.

This is really not going to be a shining moment in the history of the conservative movement. You'd think they might have learned their lesson on basic civil rights questions back in the 60s, but no. They're hellbent on replaying their worst moments.

Time to Ditch the Mortgage Interest Deduction

Adam Ozimek glosses a recent study on the effects of the mortgage interest deduction in suburban areas (which are lightly regulated) vs. urban areas (heavily regulated):

Using national data from 1984 to 2007 they found that the MID did not increase overall homeownership. In areas with light land use regulation they found that homeownership among higher income families was increased, and in tightly regulated housing markets homeownership was decreased for all income groups except the lowest....We spend around $100 billion a year on this subsidy, and to the extent that its defenders are correct and homeownership does have positive externalities, it is actually making urban areas worse off.

There you go. This shouldn't come as any big surprise, since the mortgage interest deduction was always aimed at spurring new homebuilding in the suburbs. But whether or not you think that's a worthy goal, it apparently comes at the expense of homeownership in cities. It's a policy that passed its sell-by date long ago. Get rid of it.

(But replace it with what? Middle class homeowners will feel hard done by if one of their cherished subsidies goes away while millionaires get huge tax cuts and hedge fund managers continue to benefit from things like the carried interest rule. And rightly so! But surely there's some kind of bennie we could give them that wouldn't be quite so destructive in its overall impact?)

The Future of Secrecy

Julian Assange thinks that dumping U.S. secrets on the internet is worthwhile because it will cause the U.S. government to become more secretive and paranoid, which in turn will make it more sclerotic, which he thinks would be a good thing. But just how good would that really be?

It's certainly true that closed, secretive networks become less effective — but that doesn't mean they become less effective at the things we dislike them doing. Stalin remained exceptionally good at purges and liquidations all through World War II, and that didn't stop him from helping to win the war, and dominating half of Europe. It's just that it took more dead Russian boys to do it, because being secretive and purge-oriented kind of hampered the efficiency of the economy, leaving them a little short of key items like guns. But since Stalin was running a super-secretive, centrally controlled regime, that insight didn't really matter.

Similarly, forcing the US military and the state department to become more secretive might well hamper their effectiveness. But it seems most likely to hamper their effectiveness at things like nation-building and community outreach, where you need a broad, decentralized effort. I don't see why they'd be much less effective at launching drone attacks. To be sure, the drone attacks might kill a lot more innocent civilians. But no doubt Assange thinks this is all to the good because it heightens the contradictions or something.

Discuss. I suggested a few days ago that an occasional "informational enema" might have a salutary effect even if I didn't really want to see stuff like this happening routinely. I still think I feel that way. But what's to keep it from becoming routine? And will the effort to stop it from becoming routine eventually have a positive or negative impact on the world as a whole? Especially as technology makes it easier for leaks to happen and the counterattacks have to get more and more furious.

I'm not sure. And maybe keeping megaleaks like this from happening routinely won't be as hard as we think. But it's still worth thinking about.