Matthew Yglesias's Blog, page 2373

As Long As We're Privatizing Medicare…

Here's something I don't understand about Paul Ryan's plan to eliminate Medicare, replace it with a program of vouchers for old people to use to buy health insurance, and then cut spending my ensuring that the value of the vouchers doesn't grow as fast as the cost of health care—why not just give people money?

I don't think "just give people money" is always the right idea in every circumstance. I can understand why you might want to give mental health services to someone rather than cash. Or you might pay for a child's health care or education rather than cut a check as a form of investing in the future. But of all the demographic groups to be paternalistic toward, old people seem like the worst possible option. You might support Medicare rather than cash grants for standard left-wing reasons—you think health care is a right, or you think single payer systems are more efficient. But if you're Paul Ryan or a Ryan-loving rightwinger who wants to dismantle Medicare then why not simply dismantle Medicare? Instead of an insurance voucher that groups at GDP+1 percent, give people a flat cash grant that grows at GDP+1 percent. If grandma wants to spend that money at the hospital, good for her. If she wants to spend on on heroin or a television, then that's good for her too.

Ryan's decision not to embrace the full logic of his plan is probably overdetermined. His plan is largely designed with the goal of obscuring its meaning, "saving" money on old people's health care by simply refusing to pay for old people's health care. Going to cash clarifies this point in a way that Ryan Roadmap may find undesirable. In addition, doing it Ryan's way is considerably more favorable to health insurance companies and hospital CEOs.

But I think discussion would be greatly advanced by trying to do more to separate the question (a) "how much money should we spend on old people" from the question (b) "what share of that money should be earmarked from health care" from the question (c) "how should health care financing be organized?" I'm inclined to be generous to retirees and to say that single-payer health insurance is an efficient risk-pooling mechanism, but I'm highly (and increasingly) sympathetic to the view that (b) needs more scrutiny.

Why The Beast Can't Be Starved

Ezra Klein says that if we don't pay for wars we can't subject them to any kind of cost-benefit analysis and thus have no idea if we're making good decisions. Diane Lim Rogers says the point is fundamentally generalizable:

The same point could be made with any other part of the federal budget that we currently give (and for a long time have given) a "pass" to when it comes to paying for it. If it makes sense that we ought to be evaluating whether the wars that preserve freedoms and save lives are worth their cost, then certainly we should have applied that test to the higher physician payments under Medicare or the extended Bush tax cuts–things that mostly "preserve" and "save" the after-tax incomes of higher-income households–a long, long time ago.

My strong suspicion is that this is why tax cuts fail to starve the beast (PDF). When you repeal the idea of a budget constraint, then suddenly spending doesn't need to be justified. Politically disfavored programs (food stamps, Medicaid) may still get cut but things with strong claims behind them (Tomahawk missiles, Medicare, farm subsidies) are now free to run amok.

The Freedom Loving Tea Party's Struggle Against Women's Reproductive Freedom

Amanda Marcotte on the wave of anti-abortion legislation sweeping the country and the myth of the libertarian tea party:

On the state level, an unprecedented number of anti-choice bills are being introduced in response to the perceived anti-choice bent of the Supreme Court. Florida alone has introduced 18 separate anti-choice bills. Gov. Rick Perry of Texas has declared mandatory ultrasounds for abortion patients an emergency priority, and fast-tracked it through the Legislature. Three separate states have introduced bills that could legalize domestic terrorism against abortion providers, though a bill in South Dakota was withdrawn under pressure. Instead, that state's Legislature moved on to pass the most draconian abortion law in the country, one that would require a woman to wait 72 hours for an abortion and listen to a lecture from an anti-choice activist before having an abortion. These examples represent just a tiny fraction of the anti-choice bills percolating through state legislatures.

Maybe this is all surprising. After all, haven't we heard for the last two years that the Tea Party is more libertarian and less socially conservative? If you bought that line, congratulations — you're ensconced in Beltway wisdom. The truth is that a new name for the same old conservative base hasn't changed the nature of that base. Just as before, the "small government" conservatives and the religious right have a great deal of overlap. With gay rights waning as a powerful wedge issue, keeping the religious right motivated and ready to vote is harder than ever. Reproductive rights creates new incentives for church-organized activists to keep praying, marching, donating and, most important, voting for the GOP.

I would just add my pet point that there's really nothing surprising about this. Not only in the present-day USA, but in global and historical terms freedom-talk is primarily associated with authoritarian populist nationalist movement. The freedom of the Tea Party or Jorg Haider or Geert Wilders or the fictional Jake Featherstone is a communitarian freedom, the freedom of the dominant sociocultural group to gets its way relative to cultural outsiders and reformers. It's not the freedom to build a mosque or to engage in medium-density construction in the suburbs or to have an abortion or to marry who you want. It's a freedom that demands reduced health care subsidies for poor people while insisting that health care subsidies for old people are sacrosanct.

Tom Toles on Gentrification

Much respect to Richard Layman for remembering and preserving this 1998 Tom Toles cartoon:

Funny.

Orphaned Works and Orphaned Political Causes

Julian Sanchez wonders about the political economy of "orphaned works". Granting that owners of valuable old content (Mickey Mouse, Batman) have a strong interest in preventing those works from coming into the public domain, can't we at least get some relief for the vast majority of other works that don't fit that bill.

Megan McArdle is also puzzled:

As Julian notes, it's puzzling that this hasn't been resolved. Julian asks "Who's the rational veto player here?" and I can't think of an obvious candidate. And yet, congress has not seen fit to do something about the problem, even though resolving it would seem to be a rare example of pareto improving legislation: readers get to enjoy the material, while the copyright holders, who aren't collecting royalties now, are no worse off.

I suspect the answer is either that Congress simply overlooked this issue, or that there is some reason to block it that Julian and I don't understand.

This seems to me like a mistaken model of how congress works. For a bill to pass, it needs a majority in at least one House subcommittee. Then it needs a majority in at least one House full committee. Then it needs a majority in the entire House of Representatives. In parallel, a bill that is identical in all respects needs a majority in at least one Senate subcommittee, one full Senate committee, and sixty votes on the floor of the United States Senate where objections from even a single Senator can force days of delay. Members of congress need to do all this work while simultaneously fundraising & electioneering, positioning themselves for sundry bids for higher office, etc. The only veto player you need to explain why something doesn't happen in the federal government is basic human laziness and risk aversion.

Meanwhile, even though Walt Disney and DC Comics wouldn't be hurt by an orphaned works bill they don't really gain from one either and it makes sense for them to be mildly averse to anything that puts intellectual property policy on the national agenda.

Wall Street: Still Where The Money Is

Kathleen Madigan writes that Wall Street is back in a big way as the profit center for American business:

There's no real reason to expect anything different, as the new financial regulation rules haven't even really come online yet and already congressional Republicans are fighting furiously to use the appropriations process to undermine them. But it is depressing news. As long as profits in this sector are so high, a disproportionate share of hard-working greedy people will flow into it, deploying their intelligence to try to find ways to game the system depriving more entrepreneurial sectors of the economy some of the talent they need.

Haley Barbour Comes Out Against Slavery

Mississippi Governor Haley Barbour is an admirer of the work of moderate white supremacist organizations like the Council of Conservative Citizens who he thinks were a constructive influence during the civil rights era as opposed to extremist egalitarians or the Ku Klux Klan. And in keeping with his moderate take on race relations, over the weekend Barbour endorsed the end of slavery and Union victory in the Civil War:

But he has now made a forthright declaration about the events swirling around what some Southerners still call the War of Northern Aggression. "Slavery was the primary, central, cause of secession," Barbour told me Friday. "The Civil War was necessary to bring about the abolition of slavery," he continued. "Abolishing slavery was morally imperative and necessary, and it's regrettable that it took the Civil War to do it. But it did."

Now, saying slavery was the cause of the South's Lost Cause hardly qualifies as breaking news — it sounds more like "olds." But for a Republican governor of Mississippi to say what most Americans consider obvious truth is news. Big news.

As it happens, last night I was reading a scholarly article by historian Gary Kornblith called "Rethinking the Coming of the Civil War: A Counterfactual Exercise". His argument is that had Henry Clay won the agonizingly close election of 1844 there would have been no annexation of Texas, no war with Mexico, no Wilmot Proviso, no collapse of the Second Party System and no Civil War:

The suggestion is that a Clay administration would have preferred independent California and Texas republics which, in turn, would have established the precedent for recognition of Brigham Young's independent nation of Deseret. In the short-run, non-annexation of Texas would have been a defeat for the South, but Kornblith argues it would have been good for the cause of slavery. The stable Whig-Democrat two party system would have kept slavery off the national agenda, leaving slavery as a state-level issue, and laying the groundwork for its perpetuation into the twentieth century. He argues that the speed with which Reconstruction was abandoned and the durability of the Jim Crow system (and see for a look at how little difference there was between pre-FDR Jim Crow and slavery) highlights the underlying dynamics that could have kept slavery locked in place, albeit a source of lingering controversy.

It's a provocative argument and while of course it's impossible to prove anything with counterfactuals, I do think it's useful to think about them. One counterpoint I would make is that in a North America featuring multiple Anglophone republics, the idea of breaking up the USA might have increasingly suggested itself as a kind of common sense approach. So perhaps the long-run impact of non-annexation of Texas wouldn't have been to avert the Civil War by averting secession, but to avert the Civil War by turning secession into a consensual means of coping with sectional differences. It's also worth noting that the Civil War was one of the causes of the British North America Act of 1867, so in this counterfactual universe it's very plausible that Canada might never have emerged as a unitary state. Instead, Québec would be one dominion, "Canada" would denote Ontario and some of the Canadian Plains, you'd see one or more separate Anglophone dominions east of Québec, and later British Columbia would emerge as a separate Pacific-facing one.

Adventures in Non-Destructive Budget Cutting

You can't balance the budget this way, but you can't balance the budget by cutting food stamps either and this idea wouldn't really hurt anyone:

Earlier this month, the U.S. Government Accountability Office issued a formal proposal to the Treasury and Federal Reserve noting that if it eliminated the $1 bill and replaced it with the $1 coin, the country could save roughly $5.5 billion during the next 30 years. The reason, according to the agency's report, is that dollar bills have a shorter lifespan than dollar coins because they wear much faster, which in turn requires the government to spend more to print new bills.

Back in March of 2008, Barack Obama seemed to say he favored eliminating the penny which would save almost as much money. As I understand it, the mighty vending machine lobby impedes dollar bill elimination (since machines are currently equipped to accept dollar bills but not dollar coins) whereas the penny is kept alive by big zinc.

Greens Surge in Baden-Württemberg

A double dose of big political news out of the German state of Baden-Württemberg where, as Judy Dempsey explains, the German right has lost control for the first time since 1953.

But beyond that element, it also looks like this will mark the first time in Germany history that a coalition government will be led by the Greens, who've only previously participated in government as a junior partner. When I was in Berlin in December it was clear that Social Democratic Party leaders were at least a little bit worried that Green popularity might get out of control like this and you can only imagine that they've got some mixed feelings about this particular win for the center-left. But as some of my colleagues have been emphasizing for a while now the only viable path forward for European progressives is in cooperation between these different strands of progressive politics.

Deflating Away

I said the Republican plan to increase employment by driving down wages was unnecessary, immoral, and unwise compared to the available alternatives. But as Paul Krugman points out, it's also unworkable:

[W]hen you cut the price of everything — which is more or less what happens when wages fall across the board — there's nothing else to substitute away from. [...] Things are different for a country that shares a currency with other countries. Ireland can raise employment by cutting wages of Irish workers relative to German workers. But America, with its floating dollar, gains nothing — nothing at all — from overall wage cuts. All we get is a magnified real debt burden.

I stand corrected. Indeed, I fell into a form of the flawed analogy between a country and a household. On a national level, there's nothing for US nominal wages to fall relative too. Our real wages can fall relative to real wages in other countries (and, indeed, this is happening as poor countries catch up), but nominal wages cuts don't do anything except exacerbate debt problems.