Social Norms, Taxes, and Thomas Piketty

Capital in the Twenty-First CenturyI want to say a couple of things about Capital in the Twenty-First Century. I haven’t fully digested it. The first is from the beginning of the book. The very first graph in the book is, “Income Inequality in the United States, 1910-2010.” It is an extremely interesting graph.

Whenever I’ve looked at similar graphs in the past, what I’ve focused on is that inequality is actually higher now that it has been in the last century. But this time, what I focus on is how inequality comes crashing down during World War II and it doesn’t start coming unhinged again until the late 1970s:

Income Inequality History

There are a couple of things that do not seem to be going on here. First, this is really not about the top tax bracket. It had been raised steadily throughout the 1930s without much effect. But inequality was on a steep decline before 1942, when the income tax really went up. (It isn’t that the rate went high, but the income level at which it took effect was greatly reduced.) Then, in 1964, when the tax rate was greatly lowered, income inequality stayed pretty much constant. Finally, income inequality started to rise in the late 1970s — years before Reagan brought the tax rate down further.

(Here’s an interesting thing. In 1987, the top marginal tax rate was reduced to 38.5%. This is 1.1 percentage points lower than it is today. But it applied to all incomes over $186,000 in adjusted 2014 dollars. Today, the rate is $403,000. So income taxes on the wealthy are actually quite a lot lower today than they were then. Basically, we have exactly the same top tax rate as we had in 1993.)

The second thing to note is that this doesn’t really seem to be about unionization. I’m not saying that unions aren’t important, because I think they are hugely so. But in terms of unions, they don’t seem to be of critical importance to economic inequality itself. Union rates went way up in the 1930s, again without much effect on inequality. And then after the Taft–Hartley Act in 1947, we see a constant decrease in unionization, but income inequality stays at about the same rate.

What I think income inequality is all about is norms. During World War II and following it, it was just unacceptable for the rich to pay themselves ridiculous amounts of money. Of course, there were strong unions to enforce these norms. But there is no doubt that people like Ayn Rand and Ludwig von Mises have had their effect. Regardless, since the rich will not police themselves (and really, I don’t expect them to), we need confiscatory taxes. These are not taxes intended to raise money for government services, but rather just to change behavior. If you tax incomes over a million dollars at 95%, you will see far fewer people getting paid more than a million dollars a year.

The problem, of course, is that the rich have great incentives and abilities to game the system to avoid paying taxes. This is why Piketty pushes for an international wealth tax. This is basically a way of making money disappear over time. The reason conservatives love the idea of a gold standard is that if you put a kilogram of gold under your bed, in ten years you will still have a kilogram of gold under your bed. On the other hand, if you put a kilogram of potatoes under your bed, in ten years you will have nothing at all. It makes more sense to have money be more like food and less like gold. I would love to see that, but I’m not too hopeful in the near future.

The second thing I was struck with was Piketty’s discussion of public debt. He notes that there are three ways that public debt can be managed: taxes on capital, inflation, and austerity. What I find so interesting about this list is that the first two things are simply off the table. According to the Serious People, you couldn’t possibly tax capital or allow even modest inflation. They say it would harm the economy! And it would. A little. But the alternative is austerity: cutting government spending and raising taxes on income. But these harm the economy too. But instead of harming it a little, they harm it a lot.

We get stuck with bad economic policy because it is good economic policy for those who are already rich. And those who are already rich are the ones who control the conversation. This is ultimately the biggest problem that we face on the economic front. And it isn’t just the rich within different countries. It is also the way that rich countries treat poor countries, as discussed in Ha-Joon Chang’s Bad Samaritans. I know we will eventually solve these problems, I just don’t know how.

The “50 Percent of the Votes, Plus One” Doctrine

Karl RoveOne thing I really hated about Karl Rove was his “50 percent of the votes, plus one” doctrine. I don’t go for that precisely because I believe in democracy and not in mob rule. Of course, it is all the worse in the United States where very few people vote. So getting 50% of the vote almost never means 50% of the people are in favor of a particular policy or candidate. And the conservative approach is always the same: get as few people to vote as possible.

There are some things that are not open to a vote, however. This is what the Bill of Rights is all about. This is why it is so frustrating to hear libertarians, who I think are totally wrong but usually fairly smart, say that if slavery were what the people wanted it would be okay. Wrong! And in a small defense of libertarians, the smart ones understand this very clearly. There are some rights that are not open to a vote. What’s more, we have rightly decided as a people that there are some rights you cannot even give up. If you want to be a slave, you can’t be. That is a freedom you do not have.

Scottish FlagSo even though I still believe that Scottish independence is a good idea if done properly, I find the vote quite questionable. What if the “yes” vote had received “50 percent of the votes, plus one”? Would that really have made it okay to upset the current reasonable state of things on the basis of a single vote? I don’t think it would be. And that brings up an interesting question: what level of support would justify independence? I wish there were an easy answer to that question.

There are two parts of it. First, I think there should be a very clear majority. I think some kind of supermajority would be appropriate — perhaps 60%, although maybe just 55% would be more appropriate given that it isn’t the only requirement. Second, I think there should be a high level of homogeneity in that majority. This is similar to the decision of the Second Continental Congress that all the colonies be on board before they decided on declaring independence. Clearly, this creates all kinds of problems of definitions. You wouldn’t want Scotland divided up by households so that some old crank is the only thing that is stopping Scotland from getting its independence. But Scotland is divided into 32 council areas and I think majorities (or maybe even submajorities) in all of those ought to do.

I’m sure this is the kind of proposal that is likely to make me hated by everyone on all sides of the issue. But the truth is that I don’t much care how Scotland wants to organize its affairs. I’m just using it as an example. When it comes to very important and disruptive things, I think more than a simple majority ought to be needed. Of course, here in the United States, we have a conservative movement that is the worst of all worlds. At the same time that they believe that they ought to be able to turn America into a theocracy with “50 percent of the votes, plus one,” they stubbornly obstruct the government on things they even agree on. See, for example, how the Republicans in the Senate use the filibuster against nominations that they later vote unanimously for.

The truth is that creating a governmental structure that works is really hard. My hat is off to Mr Madison. But it is also true that there is literally no free system that can work if the vast majority of the people don’t abide by social norms. That means that nothing works if we don’t treat each other with shared humanity. And I think this is why America is at such a dangerous point in its history. The leadership of a major political party does not accept the legitimacy of the other political party. Can you imagine what would have happened if the Supreme Court had canceled the Florida recount and anointed Al Gore president? The same people who concocted the Brooks Brothers riot, would have started a revolution. Liberals didn’t like how George Bush became president, but they accepted it because they accepted the system. I think most conservatives accept the system. But the people leading the movement do not. And things could go south quickly if “50 percent of the votes, plus one” ever worked in the liberals’ favor.

Budget Crises Can Be Fixed Fast; Global Warming Can’t

Paul Ryan - Reagan 2.0Philip Klein interviewed Paul Ryan at the Washington Examiner yesterday, Paul Ryan to GOP: Don’t Assume a Wave. Unfortunately, it’s in video form. But Jonathan Chait decided to take the week off from ranting about what a little dweeb Thomas Frank is and how opponents of education “reform” are big ol’ meanies who don’t care about the kids. This allowed him to write an actually interesting article with quotes, Paul Ryan Declares War Against Math. Go read the article if you are interested, it is rather good. But it isn’t surprising. Paul Ryan is a fraud and we have yet more evidence.

What I’m interested in is what Ryan had to say about the big bad budget crisis that is coming Any Day Now™. “The shame of it is, we just wasted eight years of knowing this crisis was coming, it’s the most predictable economic crisis we’ve ever had in this country, knowing about it, and not doing anything about it for eight years because of this presidency.” Wow. We’ve known about it since 2006, but it’s Obama’s fault. Bush was the guy who pushed the big tax cuts. Bush is the guy who provided the big give away to the pharmaceutical companies known as Medicare Part D. Obama actually cut costs with Obamacare, rolled back some of those tax cuts, and over all savaged the budget, which has been bad for the economy. He’s done what all the pretenders like Ryan claimed they wanted, but still Ryan says he has done nothing.

Of course, Ryan’s idea of dealing with the impending budget crisis that will now and forever more be here Any Day Now™, was to cut taxes. But this is nothing new. Paul Ryan is a hero of the Very Serious People, which means that he is by definition very unserious. But let’s look at his hysterical claim. “We’s just wasted eight years!” This is Social Security Paradox thinking: we must cut spending now or else we will have to cut spending later.

What’s really going on with Paul Ryan and the Serious crowd is that they are afraid that if we don’t cut spending right now, later the problem will be urgent enough that the people will call for tax increases. On the rich. The horror! But Paul Ryan would never say that. And anyway, his prescription has always been to cut taxes on the rich right now and savage social programs. So he isn’t even fine with the status quo of keeping taxes very low on the rich.

But the terrible thing is that if there really is an impending budget crisis that will happen Any Day Now™, we can fix it on that very day. We can cut spending on that day. We can raise taxes. It might be a bit painful but it would not be catastrophic. In fact, it would probably not be any worse than the last six years have been for the poor anyway. But there is an impending crisis that does not allow for quick fixes like the budget: global warming.

Climate Change Is a HoaxRyan, of course, doesn’t care about climate change. It is hard to say where he is on the stages of global warming denial, because he bounces around. But that’s the point of the stages: you decide to deny doing anything about global warming and then you pick a reason. The more you know or the more your audience knows, the higher the stage you pick.

Doing something about global warming will take decades. The lifetime of carbon-dioxide in the atmosphere is uncertain because of how much it cycles, but more recent estimates indicated about 50 years. The lifetime of methane is about 10 years. And the lifetime of nitrous oxide is about a hundred years. Of course, this isn’t the amount of time that it takes to remove these gases. This is the amount of time it takes to remove a molecule on average. Think of it as a half-life, but it is actually the amount of time it takes to remove somewhat more than half. Still, you can see: if we stopped putting carbon in the atmosphere today, the problem would be with us for decades to come. And it might cause changes that would stay with us for thousands of years.

Paul Ryan, like pretty much all Republicans who seem to shop at the same store for their suits and their ideologies, thinks that we absolutely must do something about the budget crisis that will happen Any Day Now™, even though we can easily address it. But global warming is a problem we can put off until things are catastrophic, even though there is really nothing we can do at that point but wait it out. This is modern American conservative thinking. And it is terrifying.

The Tragedy of Typhoid Mary

'Typhoid' Mary MallonOn this day in 1869, Mary Mallon was born. She is better known as Typhoid Mary, because she was an asymptomatic carrier of typhoid fever who infected many people in New York.

She was born in Ireland and immigrated to the United States when she was 15 years old. I don’t know what she did for the first 15 years in the States other than live with her Aunt and Uncle. But at the age of 30, she began working as a cook for a number of wealthy families in New York. She must have known somewhere in her mind that there was something wrong. She would start a new job, people would get sick. She would move to a new job and the same thing would happen again. During the first years of the twentieth century, she worked for seven different families. Eventually, one of the families hired the sanitation engineer George Soper and he figured out that it had to be Mallon.

This led to Mallon’s being quarantined (jailed) for three years at North Brother Island. After that time, she was released under the condition that she not work with food. She was given a job working in a laundry, but it paid very poorly. So she changed her name and went back to cooking. She always maintained that she was not a carrier of typhoid fever. And indeed, asymptomatic carriers of the disease were unheard of. I’m sure there was a lot of cognitive dissonance. After infecting a whole lot of people over the course of five years, she was arrested and sent back to North Brother Island, where she lived for the remaining 23 years of her life.

There are a few interesting things about her case. One is that other asymptomatic carriers of the disease had been discovered, but the state did not lock them up. Specifically, there were three men who were all responsible for as many or more cases of the disease. Was it sexism or racism or just that she was the first discovered? I don’t know. Clearly, something needed to be done. But it needed to be done for all the cases, not just this one.

What’s more, this is one of those cases where I just don’t understand government policy. Here was Mallon who didn’t want to be confined to hospital/prison all her life. She had been okay working as a laundress but found she couldn’t make it on the salary. This is clearly a problem you could throw money at. And indeed, the government did. She had to be cared for on North Brother Island. Why not instead set her up in a dress shop and give her a guaranteed salary? But no. We have the same problem today. We are more than willing to spend $50,000 per year to lock up drug users, but spending $20,000 per year to send them to school is just unacceptable.

Regardless of all the damage that Mary Mallon did in her life, she is still a tragic figure. And the great crime is not hers, but the government’s. And in terms of how people are treated, things really haven’t changed in the century since she lived. We have certainly gotten much better at the science and at treating the disease. But in terms of humanity, we are still as primitive as ever.

Happy birthday Mary Mallon!

It’s Not the Rich, Stupid; Cons Just Hate the Poor

Rich Uncle PennybagsThere was a time when the Census Bureau just released figures on poverty as in, “How much money are people making?” But as conservatives saw that poverty rates remained high, they balked. “What about all those fist fulls of sweaty cash we are giving them?!” they screamed. That is: what about the aid the poor get from the federal government? And so the Census Bureau came out with another measure, the Supplemental Poverty Measure or SPM. And it showed something really interesting: since the bursting of the housing bubble in 2008, SPM is actually higher than the old way of measuring poverty. Right now the old way indicates that we have 15% poverty and the SPM indicates we have 16% poverty.

Of course, you know how it goes. If poverty were down, they would declare “Mission Accomplished!” and call for eliminating poverty programs. And if poverty were not down, they would declare that the poverty programs don’t work and call for eliminating poverty programs. But if you look at the actual data, you will see something that is really interesting. From 1967, the poverty rate went down — and fast. It went from roughly 26% to less than 18% in that great inflection point year: 1980. Things changed under the great economic stewardship of Ronald Reagan and his war against the “welfare queens” on behalf of the poor beleaguered rich. The poverty rate shot back up to the low 20% level.

Luckily, a man of the people came to town in 1992. And by “man” I mean Bill Clinton. And by “the people” I mean, of course, “the rich.” The bubble-based boom that he was president during allowed more people to get jobs and so the poverty rate again went down. Over the course of six years, it went down from 21% to 15%. But during those years when poverty was being reduced, Clinton kept his word that he did not come to praise the poor but to bury them: he did indeed “end welfare as we know it.” And look how well it worked! Poverty rates were going down! It had absolutely nothing to do with his welfare policies (or any of his other policies, for that matter), but there was a correlation. And who cared?! He would be out of office by the time all the pain came back!

Under Bush the Younger, the poverty rate stayed pretty much where it had been. It went up a percentage point during the his first term in response to the recession. And then it went down a percentage point during his second term during the recovery. But when the crisis came, it went up starkly and continues to stay high. There are two great conservative heroes of the 20th century, although most conservatives aren’t aware of this. The first was Ronald Reagan, but he could only do so much. In much the same way that it was true that only Nixon could go to China, it required New Democrat Bill Clinton to solidify those conservative gains and really stick it to the poor long term.

And where are we today? Well, it depends upon where you are in the pecking order. Michael Hiltzik laid out the situation very well today, Census Data on Poverty Show Results of Economic Policy Gone Wrong:

The data show that Social Security is the single most powerful anti-poverty program in America — if its benefits were eliminated, the rate would have risen in 2012 from the SPM’s 16% to 24.5%. Among those 65 and older, in a world without Social Security the SPM poverty rate would have risen from 14.8% to a Depression-level 54.7%.

Of course, one reason that Social Security is such a powerful anti-poverty program is that it is the only one that hasn’t been savaged over the last four decades. But the conservatives would love to savage it! It’s the one remaining poverty plan that they could destroy and create huge numbers of 70-somethings out in the labor market keeping wages down at McDonald’s!

This is one small bit of good news, though, “Also striking is the effect of relieving the poor of the burden of medical expenses.” So Obamacare is likely to work to reduce poverty in the years ahead. Or at least, it will work in those states that have accepted the free money of the Medicaid expansion. But it also shows why Obamacare is such a big target for conservatives: it helps the poor!

I used to be of the opinion that conservatives didn’t hate the poor; they just didn’t care. They loved the rich and wanted to do everything they could to help them. That often involved harming the poor. But harming the poor wasn’t the point. I’ve come to think that I’ve been wrong about that. The truth is that harming the poor is usually bad for the rich — or at least not helpful. The money the poor get will jut get spent and circulate to the rich anyway. So helping the poor really helps the rich. See my article, I Was a Middle Class Food Stamp Kid.

So it would seem that harming the poor is an end in and of itself for conservatives. The only doubt I have is the thought that conservatives can’t be that mean and spiteful. But that’s just silly. Conservatives in red states all over the nation are rejecting free money from the federal government that would provide healthcare to the working poor. This is free money that would help everyone in their states. They aren’t taking the money out of pure spite. So of course they would hurt the poor just for the sake of it.

Education “Reform”: Looking for Cheap Answers the Rich Want

Jesse RothsteinI am a generalist by nature. This is part of why I am no longer a scientist. It just isn’t in me to dig really deep into what are usually esoteric subjects. I’m fascinated by zoology, but the idea of spending a lifetime studying evolutionary changes in the jawbone of the cougar strikes me as rather dull — even though I fully admit that for the right kind of person, there could hardly be a more fascinating subject. This is true of politics too. I know more about economics than most political bloggers, but I certainly am nothing close to an expert. The same is true of political science.

But I have a trick that allows me to see what is going on in politics without being an expert: I look at the incentives of people who push particular policies. That’s especially true in the education “reform” movement. I see that there are many things wrong with our educational system. And there are some things that are too obvious for anyone to miss. The biggest one is the inequality in education funding. We accept a system where the most resources and the best teachers are given to the students who need them the least. Yet this is not an issue that the mainstream education “reform” movement is interested in. In fact, they seem to have this idea that teachers should teach just for the love of it and shouldn’t have the same needs and desires that all workers have.

As a result of this observation, I’ve always been right on top of the con that is the attack on teacher “tenure.” I put the word in scare quotes because it isn’t the kind of tenure that most people think. Basically, it just means that schools have to have reasons for firing teachers. They can’t, for example, fire a black teacher just because the mostly white parents are unhappy about integration. Regardless, how could it possibly be that giving teachers the right to due process is really the A Number One reason that our schools under perform?

Well obviously, that isn’t the A Number One reason. And all you have to do is look at who is funding the education “reform” movement. The poster children of the movement are Billie and Mindy: the billionaires who so care about the kids their primary concern is destroying teachers’ unions. Providing educational equality is something that might take money away from Billie and Mindy. But the more unions can be crushed, the more money the economy funnels to capital owners like themselves.

This brings us to a very interesting interview of Jesse Rothstein by Max Ehrenfreund over at Wonk Blog, Teacher Tenure Has Little to Do With Student Achievement, Economist Says. But before discussing it: of course! I would think differently if the education “reform” movement said, “We have to do something about unequal education funding and get rid of teacher tenure that is protecting bad teachers.” But they aren’t. It is always, “Well, unequal education funding is a problem, but it is politically impossible to do anything about it.” Why? A recent poll found that 77% of Americans have confidence in public school teachers. It isn’t that it is politically impossible. It is that the funders of the education “reform” movement aren’t interested in funding such work. Because they don’t care about improving education; they have other priorities that they are simply using “the kids” to facilitate.

Let’s consider incentives for teachers, shall we? Getting rid of teacher tenure makes being a teacher less appealing. Ask yourself: would I rather have a job where I have some security or where I can be fired for any reason at any time? Not only would you rather have the former, you would probably even be willing to take a job that paid less for that. Yet the education “reform” movement claims getting rid of tenure would be great for the kids. This isn’t totally loony. Getting rid of teacher tenure would doubtless allow more bad teachers to be more easily fired. But it would also cause fewer good people to go into teaching in the first place. It would also allow administrations to fire good teachers for frivolous and political reasons. So would the elimination of teacher tenure really improve the education of our children? Let’s say that it is a contention that is at best controversial. But it is taken as gospel by those in the education “reform” movement.

Consider the most ridiculous argument for getting rid of teacher tenure: young people love risk! Here’s Jesse Rothstein:

The argument that anti-tenure people make is, “Look, there are all these excellent Harvard graduates and Yale graduates or whatever that are now going into finance because it’s risky. They like risk, and those people are being repelled from teaching by the lack of risk.” The people who are going into finance are not just taking on more risk, but are also getting a lot of reward for that risk. That was in some ways the thrust of my research. You can’t think about the risk in isolation. You’ve got to think about the combination of the pay package and the risk. If you adopt a policy that increases the risk, you’re going to have to pay people more to offset that. Maybe that’s a good deal, and maybe it’s not.

Spoken like a true economist! No wonder no one listens. He makes too much sense. Of course, the very idea that people go into finance because of the risk is ridiculous. If they were looking at the same reward with less risk, even more “excellent Harvard graduates and Yale graduates” would be going into finance. And we have to ask ourselves, “Do we really want the kind of people who are going into finance to be teaching our children?” When I was in college, I knew guys like that and they were, not to be too fine a point on it, the worst people in the world.

Rothstein points out another aspect of education “reform” that is toxic: student testing. As is entirely typical of us Americans, we don’t even care about doing it well. What we care about:

I think there’s been a tendency in thinking about methods to prioritize cheap methods over methods that might be more expensive. In particular, there’s been a tendency to prioritize statistical computations based on student test scores, because all you need is one statistician and the test score data. Classroom observation requires having lots of people to sit in the back of lots and lots of classrooms and make judgments.

In the interview, Max Ehrenfreund makes a stupid statement, “Everyone agrees that the goal should be to make teaching a respected profession, a profession that talented and able people want to enter.” How can he even say this? The education “reform” movement wants to make the lives of teachers harder. It wants to destroy unions and it wants to make employment more risky. This does not say, “We respect you!” But Rothstein provides an excellent answer to Enhrenfreund’s ultimate question about what could be done to make teaching a more respected profession:

We could double teachers’ salaries. I’m not joking about that. The standard way that you make a profession a prestigious, desirable profession, is you pay people enough to make it attractive. The fact that that doesn’t even enter the conversation tells you something about what’s wrong with the conversation around these topics. I could see an argument that says it’s just not worth it, that it would cost too much. The fact that nobody even asks the question tells me that people are only willing to consider cheap solutions. They’re looking for easy answers, not hard answers.

He’s actually a lot more positive toward the education “reform” movement than I am. I agree with everything he said. They are looking for easy answers — easy for their funders, that is. But above all, the funders have particular policies they want to push that have little to do with educating children. And the people in the movement itself are only interested in perusing policies that the funders will pay for. In the end, the rich will get what they paid for: fewer worker rights and a more compliant workforce. What we won’t get is better education.


H/T: Jeff Bryant

Incentivizing “Job Creators” Doesn’t Help Economy

Dean BakerDean Baker wrote an interesting article this morning, Should We Worry About Economic Stagnation Due to Weak Supply? It is primarily a response to work by Northwestern University economist Robert Gordon, who has argued that we are headed for a long period of slow growth. Baker scoffed at the idea, not because it is ridiculous, but just because economists have such a frightfully bad track record for making predictions about economic growth.

Baker also noted that there are two competing theories about growth among economists. First, there is the “robots will take all our jobs” theory. By this theory, soon productivity will go through the roof because McDonald’s won’t even have to employ people to make our McDoubles for us. Second, there is Gordon’s (and many others’) theory that productivity is going to stagnate. Baker, in his usual snarky way noted what this says about the economics profession:

This would be like a person going to a doctor for a check-up, with the doctor concluding that the patient is seriously obese and must immediately begin a strict diet and exercise regimen. The patient then goes to another doctor for a second opinion. This doctor is concerned about the patient being too thin and prescribes a high calorie diet to allow the patient to put on weight. This is the state of economics’ ability to predict productivity.

I want to add one thing to this issue, which Dean Baker is well aware of, but usually doesn’t mention. Productivity really doesn’t matter. At least it hasn’t for about four decades. There was a time when increased productivity led to higher wages. There was a partitioning between profits and wages. When productivity went up, profits went up and wages went up. It was a very equitable system where both capital and labor shared the benefits of productivity increases. No more:

Productivity and Real Wages

What this means is that if productivity doesn’t go up, the real wages of workers will be stagnant. But if productivity does go up, the real wages of workers will be stagnant. Dean Baker talks about this issue a lot in general terms: economic inequality is a policy decision. It isn’t God (or Market) given. So I have a very hard time caring about productivity growth when it means nothing for the average worker.

This too says something about the state of economics today: it is primarily concerned with the interests of the rich. In the late 1970s (and certainly by the 1980s), economists should have stood up and made a very big deal of the fact that productivity had become unmoored from the wages of workers. But as long as productivity led to higher profits, it didn’t matter. Who cares about the plebs? Am I right?!

Baker brought up another interesting point in the article. If productivity is going to be slower, then there is less risk of taking money from the “job creators.” If taxes must be kept low so that they will continue to innovate, and the innovations are going to be slow coming, it doesn’t mean as much to cut down the incentives of them to innovate. But I think the government should look at it differently (and should have been for the last four decades): if productivity increases are going to mean nothing for the vast majority of the population, why are we incentivizing to innovate at all? After all, all we are doing is giving them tax breaks to make more money that they don’t use to help the rest of the economy.

Racist Apologetics From Recent Mormons

Joseph Fielding SmithThere is a reason why one man is born black and with other disadvantages, while another is born white with great advantages. The reason is that we once had an estate before we came here, and were obedient, more or less, to the laws that were given us there. Those who were faithful in all things there received greater blessings here, and those who were not faithful received less…

There were no neutrals in the war in Heaven. All took sides either with Christ or with Satan. Every man had his agency there, and men receive rewards here based upon their actions there, just as they will receive rewards hereafter for deeds done in the body. The Negro, evidently, is receiving the reward he merits.

—Joseph Fielding Smith, LDS President
Doctrines of Salvation, 1954

Political Writer H G Wells

H G WellsOn this day in 1866, the great writer H G Wells was born. He is best known for novels like The Time Machine, The Island of Doctor Moreau, The Invisible Man, and The War of the Worlds. But I’m not very interested in them. I just don’t find science fiction all that interesting.

But apparently, he didn’t either. All those books were written in the late 1890s. After that, he spent much of his time writing about politics. He was a proponent of socialism. But during his lifetime events changed quite a lot and he eventually came to see the best kind of system as the social democracies we see today in Europe.

I find his position on Zionism very interesting because it so follows along with mine. Throughout most of his life, he was against Zionism because he considered it exclusionary. He felt that all the races should interbreed, so that we could all get on with the business of being human. I’m totally with him on that. Whenever I hear people talking about keeping races pure (which I do sometimes regarding Africans and Jews), it sounds like madness. If there is anything good to come of globalization, it must certainly be that we can get past this mythical idea of race.

The problem is that there are always people who will divide us. I still find it amazing that people hate Jews, when in terms of “race” they just seem like white people. Yet the Nazis based a whole nation-cult-genocide on it. After seeing what the Nazis had done to the Jews, Wells changed his position. I find myself again with him. But in my mind, Zionism ought to be a temporary thing as the people of the world get on with their interbreeding to make us all a bunch of beautiful brownish people. Unfortunately, I think that Zionism tends to perpetuate the “purity of the race” thinking. But that discussion is well above my pay grade.

What’s perhaps greatest about Wells is that he really was a thinker. And as a result, he managed to annoy and offend just about everyone. I’m not saying that that is a good in and of itself. But he was idiosyncratic. And he followed that. And I admire it.

Happy birthday H G Wells!

Secession Oriented States: Full Correlation

Correlation Between Secession Desire and Federal Funding

After writing Secession Oriented States Get More From Feds Than They Give, it bothered me that I didn’t do the analysis of all the regions. So I did them. I still wish I had the numbers for the individual states, but I was able to run a correlation on what I had.

There is a correlation, but it isn’t that strong — about 80% or 1.2 sigma. The problem is the Southeast: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and West Virginia. This is a very big and heterogeneous collection of states. What’s more, there is a slight problem with the Rockies: Colorado, Idaho, Montana, Utah, and Wyoming. This area is a lot more anti-government than their low federal benefits would indicate. But there is a reason for this. Colorado is 56% of the economy of this region and it has an extremely low federal benefit level (70%). Without it, the level would be 106%. That would put it right along the line implied by the other regions (without the Southeast).

Regardless, there is a correlation: areas that get more federal government largess are more likely to be in favor of getting rid of the federal government. Just the same, the correlation is weak. But we ought to expect that given the grouping of the states. That will tend to reduce the correlation and that is more true the larger the group is, as in the Southeast.

Secession Oriented States Get More From Feds Than They Give

Secession Reuters Poll

I learned from the Los Angeles Times, Poll: Nearly One in Four in America Would Favor Secession. In one way, this doesn’t matter in the least. It seems that there is always about a third of the American people who are in favor of anything. But this is probably a real thing. Still, the Times is wrong to claim that, “Nearly one out of four Americans is so fed up with Washington that they are prepared to not take it any more and would favor their state breaking away from the rest of the United States.” I doubt that’s true, even if the writer is trying to be cute. What it probably means is that one-quarter of Americans are just crazy.

The data come from a Reuters/Ipsos poll. It also found that men were more in favor of leaving the union as were poor people (probably an indication that they lived in poor states more than that poor people in New York want to leave the union). It is above all an indication that there are a lot of frustrated and angry Americans. A whopping 53% of people who identified with the Tea Party want to leave the United States. This goes along with what I’ve long said: there is a strong tendency towards treason in the conservative movement.

Unfortunately, I couldn’t find the details of the data. It looks like they just didn’t release it for each state. It is very possible they didn’t have enough data to do a state by state analysis. But going off the regions in the map above, I decided to take a look at just how reasonable dropping out of the union is. As is well documented, the states where the people most complain about the federal government are generally the states that get the most money from the federal government. No one ever said Americans were rational.

I’m sure you’ve seen maps that show how much a particular state gets back from the federal government for each dollar it puts in. The biggest determinant of this is the age of the population. Like Florida gets a whole lot more back because there are so many retired people. Nonetheless, this percentage does tell us a lot about how different states would get along by themselves. But there is a problem: those maps you’ve seen are almost all wrong. That’s because they usually represent a single year. Things change a lot over the years. So what I did was to do the ten year average from the data fro 2004 through 2013. Then, to get the regional values, I did a weighted average based upon how much total money they send in federal taxes.

I only did the calculation for three regions: West, Southwest, and New England. I’m especially interested in the last two because they represent the most and least interested in leaving the country. The return on federal taxes for the regions are as follows:

  • $0.85 West
  • $1.19 Southwest
  • $0.86 New England

In other words: the states are want to leave the union are the ones who depend most upon it. Now some might take exception with the Southwest, because Texas is generally presented as a state that pays more in federal taxes than they get back. While that is true of some years and was true of last year, it hasn’t generally been true. For the last decade, Texas has received $1.02 for every dollar it has sent to the federal government.

But let’s face it: this isn’t about economics. People who want to leave the United States want to do it for cultural reasons. They want to deny same sex couples equal rights. They want to make abortion illegal. And not to put too fine a point on it, but there are a lot more people than you think who want to deny rights to different races and to bring back Jim Crow or worse.

Still, it is interesting to see that economically it doesn’t make sense. And I have little doubt that those who call for secession think that the federal government is screwing them in terms of taxes as well.

The Rich Win Again, This Time in Scotland

Scottish Independence DeniedAs I’ve been clear: I never thought that Scotland would vote to leave the United Kingdom. And I’ve had my problems with the idea. In particular, I think they should have dealt with the monetary issue facing them. They needed to set up their own currency. All they had to do was talk to some people in Spain. Or Italy. Or Ireland, for God’s sake! But overall, I was in favor of Scotland leaving the UK.

It reminds me of a bit from the film 1776 when Benjamin Franklin is arguing with John Dickinson, “We’ve spawned a new race here, Mr. Dikinson. Rougher, simpler; more violent, more enterprising; less refined. We’re a new nationality. We require a new nation.” That doesn’t perfectly apply to Scotland, but I do think it ought to be its own nation. It isn’t Northern England. It is a distinct group of people and to paraphrase Dr Franklin, “It deserves to be a new nation.”

Most liberals were pretty positive toward Scottish independence. But I find it a bit bothersome that some of my liberal friends are thrilled that Scotland is staying in the United Kingdom. As liberals, we should all know that other than the United States, the UK is the most conservative and therefore messed up country among the advanced economies. It is always one step behind us in stepping on the little guy with powerful and innovated new tools. The Scots are a more liberal people. And not only would it be nice to have another liberal country, the break with the UK would probably have pushed England a bit toward the left itself.

Zack Beauchamp has done great coverage of the Scotland vote for Vox over the past month, and yesterday he provided another interesting article, The Scottish Vote Was a Class War and the Rich Won. It is based upon some preliminary research by Susan Johnston. And she found a shockingly clear correlation between support for staying in the UK and disposable income of the voter. I’ve greatly altered the original graph, which actually makes the correlation look even stronger:

Scotland Independence Vote by Class

There is only thing that bugs me about this graph. This could just be showing an age divide. In general, older people are more wealthy than younger people. But based upon polls before the election, I think we will find that even taking this into account, the Scottish independence vote was very much a class vote. And look at this “10 Reasons for Scottish Independence.” It looks like the Scottish version of Occupy Wall Street:

Scotland Independence Vote by Class

I especially like the last one, “A fairer society that cares for all its people, not just the rich.” Again, now may not be the time for Scottish independence. I would like the whole issue to be taken more seriously because I don’t want the Scottish people to be hurt. But there is no cause for triumphalism about this vote. It is a mixed bag. But as an American liberal, I stand far more with Scotland than I do the United Kingdom or even Ireland.

But all liberals really ought to think hard about celebrating the continued taxation of Scotland for the purpose of supporting one of the largest and most aggressive militaries in the world. It is terrible that a liberal people are forced to support a government that even when nominally liberal gets anemic leaders like Gordon Brown or war criminals like Tony Blair. And otherwise, they get corporate stooges like David Cameron.

So maybe it is for the best that Scotland remain in the United Kingdom. I’m certainly open to that argument. But this is no time for celebration. The vote against independence is what the rich wanted. If it happens to be the right thing, that’s just a coincidence. The rich get what they want. That’s true here in the United States. And it is sadly also true in Scotland.