Matthew Yglesias's Blog, page 2496

The Humanities

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Firstly, what Michael Bérubé said about "the humanities".

Second, I'll just say a lot of what I hear said about humanities versus more technical subjects as an educational endeavor seems to me to be fairly disconnected from reality. If you look around the world, you'll see that the bulk of what people do in countries that aren't extremely poor peasant agriculture societies involves human beings communicating with one another. Often in writing. And it's simply not the case that the United States of America is awash in people who are really great at communicating ideas clearly and concisely in the written format. And yet doing so is useful in a wide array of fields of endeavor. It's useful even for people primarily in technical fields. And it's certainly useful in basically every business setting I can imagine. After all, if you have a good idea about anything it's hard to put that idea to use unless you can communicate it persuasively to other people.

And to get back to the humanities, any effective education in the humanities ought to impart to its students an enhanced ability to communicate ideas clearly. That's a valuable skill and there's absolutely no reason to believe "too many" people are acquiring it. Indeed, it seems clear to me that too few people are acquiring it. The issue is that a lot of people manage to go to college and spend some time there without actually acquiring much in the way of improved communications skills. That, however, isn't an indictment of "the humanities" it's an indictment of ineffective teaching. Obviously, though, ineffective engineering or biology education isn't going to be useful either.

Earmark Ban

A lot of the progressive commentary I've seen about the idea of banning congressional "earmarks" lately has some rather mocking or dismissive of the banners. And many good points have been made. Populist conservatives really do tend to drastically overstate the importance of this issue. And many conservative appear to not actually understand how earmarking works and don't realize that there's no particular reason to believe that ending earmarks will reduce spending at all—what matters is the size of the appropriation. Earmarking, or lack of earmarking, merely changes around who decides what the money gets spent on.

But all that said, any kind of sensibly operationalized ban on earmarks really will, in a small way, be a good thing. Since members of congress are elected to represent specific geographical constituencies, it's inevitable that parochial interests will be overrepresented in the legislative process relative to national interests. Any procedural rule that leans against that tendency is, in my view, a good thing. It's good not because representation of local interests is a bad thing per se, but simply because our political system is very heavily weighted in that direction anyway.

If you look at the long-term budget projections, the fact of the matter is that the aging of the population and the growth of health care costs is set to increase federal spending above a sustainable level. That means we'll need higher taxes. And it means will need better approaches to health care. But it also means that all public spending on everything that's not health care for senior citizens is going to come under substantial pressure. Under the circumstances, if you care about the purposes advanced by domestic discretionary spending it's important to make sure that pot of money is spent as efficiently as possible. Curtailing earmarks should advance that goal, and if Mitch McConnell's fear of tea partiers is making that more likely, then that's a good thing.

Repopulating Urban America

The city of New Haven appears to be enjoying something of a renaissance lately as better political leadership combines with the strengths offered by Yale, good connections to major cities (New York, Boston), and the general prosperity of the state of Connecticut. But downtown is still very much a depressed area despite proximity to the university. The result is actually quite aesthetically cool, since the old buildings are very handsome and the mix of uses is interesting. But obviously the city could rise further.

One thing I saw down there was some Customs and Border Patrol cars near the federal building:

(my photo available under cc license)

It's interesting to note in this regard that New Haven, like many traditional American cities, is currently way below its peak population. The 1930 census recorded 162,665 people living in the city. In 2009, that was down to 123,330 people. That's a decline of 24 percent. Under the circumstances, it would almost certainly be a good thing for the city if ten or twenty or thirty thousand people living in poor and/or poorly governed countries wanted to move here and get jobs. Even if the wages they earned were below the currently prevailing wage level (as they almost certainly would be), the increase in the general level of activity in the city would open up many opportunities for the existing population. Older, underpopulated cities like New Haven typically have substantial levels of underutilized capital—buildings and infrastructure—and remobilizing those resources would be widely beneficial.

Of course the same would be true if people currently living in suburban parts of Connecticut were to choose to move to New Haven. But though some have done that, obviously most people haven't and that's fine. Suburban Connecticut is very nice and New Haven has a lot of problems. But there are lots of places in the world—Kolkata, Chiapas, Lhasa, Kinshasha, Tiranë, etc.—that are worse than New Haven. If there were a viable legal path for people from those places to find work and housing in American cities as guest workers or permanent residents, I'm sure plenty of them would choose to do and plenty of entrepreneurs would think up things for them to do.

Meanwhile, Douglas Rae's book about New Haven's history, City: Urbanism and Its End is one of the best explications of general urban issues that I've ever read.

The Wonk in a Time of Partisanship

Something I've noted with interest as we switched from the George W Bush administration to the Obama administration is that often surprisingly little in terms of policy analysis separates the "supporters" of a policy from a the "opponents" of it. When policymakers move to address a problem, they normally do succeed at coming up with something that would improve the situation they're seeking to address at least a little. And yet the actual political process invariably turns up something less optimal than what you'd draw up around the seminar table. Consequently, two people with very similar views of whatever the issue at hand is can always manage to come up with divergent blog posts / columns / sound bites / whatever simply by choosing to emphasize the positive or the negative.

The result is to create a kind of exaggerated view of how much polarization there is about policy issues. Many people are strongly committed to the view that the United States both could and should bear a level of taxation more similar to what you see in Europe, whereas others are strongly committed to the view that democratic countries pathologically overtax their wealthiest citizens and this trend should be resisted with all possible force. This is a really important disagreement among people with serious ideas about economic policy. And it naturally drives divergent views about the merits of the two political parties. But then that starts to different takes on things like ARRA, quantitative easing (where Doug Holtz-Eakin seems to be saying it's okay for monetary policy to be too tight because we really ought to do tax reform), the Waxman-Markey climate bill, etc.

Further exacerbating the trend, formerly marginal schools of policy analysis start to gain credibility as soon as they become the only way to generate the "right" policy outcome. Throughout the 25 years before Barack Obama's inauguration, Republican Party officeholders and conservative media figures showed very little interest in real business cycle or "Austrian" accounts of macroeconomic stabilization. But these constructs produce very strong and clear critiques of some signature Obama administration initiatives, so suddenly you hear much more about them.

The result of all this is that people who follow politics in a somewhat casual way are likely to come away with a vastly exaggerated view of the level of practical disagreement about policy among the "experts" on both "sides" and to underrated the extent to which bad outcomes represent pathological elements of the system itself.

Tax Carbon Consumption

Recently Paul Krugman argued that the only realistic solution to our long-term fiscal problem is some combination of death panels and sales taxes. Specifically, on the revenue side "we'll need more revenue — several percent of GDP — which might most plausibly come from a value-added tax."

I really think the VAT is a decent idea whose time is passed and is now obsolete. VAT recommends itself as an economically efficient revenue raiser, with the downside being that it's regressive. The result is that from a 2010 point of view it's completely dominated by the idea of a carbon tax. A carbon tax is also an efficient, but regressive, form of consumption tax. But by specifically taxing consumption of carbon dioxide emissions it also manages to contribute to solving a massive ecological problem. The political obstacles to a carbon tax are formidable, but so are the obstacles to a VAT. Under the circumstances it would be tragic for a political coalition to muster the power necessary to implement a hefty regressive consumption tax that isn't specifically targeted at greenhouse gas pollution.

It's time for tax and fiscal wonks to change their tune, stop talking VAT, and start talking carbon tax. Gain some allies in the climate hawk community.

Schakowski Plan Would Benefit From Addition Of More Medicare-Related Hand-Waving

Representative Jan Schakowsky is both smart and a dogged progressive, so it's no surprise that her alternative proposal to the Simpson-Bowles debt reduction plan contains a lot of smart, progressive ideas. But what it does—balance the budget by 2015—is basically irrelevant. As you've probably heard a dozen progressives say a thousand times, the long-term budget gap is primarily about health care costs. And while Schakowsky has some ideas in there that provide a one-time reduction in health care costs (public option for ACA exchanges, for example) but there's nothing on the systemic growth in Medicare.

Of course Simpson-Bowles doesn't really have anything on this either. Instead they have a vague assertion that costs should be held to GDP+1% through some unspecified measures. So I guess it's fair for Schakowsky to play by those rules too.

That said, it's the coping with Medicare part that we could really use a commission for! Unlike Social Security, this doesn't call for a brute quantitative compromise where progressives want X and conservatives want Y so we meet somewhere in the middle. I think it would serve the country well to appoint a real panel of experts—not politicians, but policy folks, though ideally ones with some experience in government—and have them devise and evaluate a whole bunch of different options. There's probably nothing that would take a big bite out of Medicare that the 112th Congress would agree to, but the point is that we could really use mores public discussion of the main options—firmer price controls, more means-testing, more rationing.

Hot Rafael Yglesias EBooks Now Available

What's a blog for if you can't abuse it a bit? Not much! So I'm proud to note today that building off the critical and commercial success of A Happy Marriage Open Road Integrated Media now has ebook copies of my father's complete back catalogue available as eBooks, along with some exciting multimedia features about the author. They're out in all major formats.

Here's Tyler Cowen on Dr Neruda's Cure for Evil.

Endgame

Waiting a long long time:

— The Shaw urban renewal plan.

— Ex-offenders and the labor market.

— Hair Cuttery has an absolute ban on hiring ex-cons.

— I have no problem with giving the Fed and inflation-only mandate; the problem is they've been undershooting their inflation target not that they've been paying too much attention to it.

— The ideas deficit.

— Stiff headwinds.

— Lurking behind Portugal, Greece, and Ireland is Spain, which is too big to rescue.

— People should talk more about the Italian growth disaster; that's one or two good years out of the past 15.

In honor of the Beatles/iTunes deal, here from the Backbeat soundtrack are some dudes pretending to be the Beatles covering the Marvelettes' "Hey Mr Postman".

The Generalized System of Preferences

Far and away the most persuasive critique of the most recent round of proposed trade deals is that these agreements actually have relatively little to do with trade. Instead since all kinds of business regulations "affect" trade, you've got a lot of stuff about intellectual property rules, capital flows, privatization of government services, etc. It's possible to make a case for these things, but you certainly can't take the general "case for free trade" and then apply it across the board.

The issues surrounding the Generalized System of Preferences scheme really are classic trade matters. This is a program to allow (some) goods from (some) developing countries to enter the United States without the imposition of special "we don't like foreign-made stuff" sales taxes. As Sallie James explains:

The program has benefits: some producers in some poor countries are able to sell more than they otherwise would in the U.S. market, and U.S. consumers benefit to the tune of hundreds of millions of dollars a year because of the tariff exemptions.

But the GSP still represents managed trade, and poorly managed at that. The program is designed so certain goods in which poorer countries tend to have a comparative advantage — textiles, for example — are excluded from the program, mainly because of the influence of the U.S. textile lobby. There are limits on how much of a particular product a beneficiary country can export duty-free, which means that truly efficient and competitve exporters are shut out. The very existence of the program has proved a stumbling block to (superior, if not first-best) multilateral trade liberalization, because GSP beneficiary countries don't want reductions in general tariffs to erode their preferential access.

America's habit of charging tariffs on imported textiles is particularly egregious. Clothing represents a larger share of consumption for poor people than for the rich. Consequently, I think most people understand that if I were to propose a special sales tax on clothing it would be an unusually regressive tax measure. By levying the special tales tax exclusively on foreign-made clothing we don't eliminate the negative impact on poor Americans. We do, however, shift around who benefits. By taxing only foreign-made clothing, government revenue (which at least finances many programs that are important to poor people) declines and instead many of the benefits are captured by the owners and managers of US-based textile firms. To make things even worse, politically powerful well-heeled people have generally managed to make it the case that luxury goods are taxed more lightly than things ordinary folks buy.

Long story short, dropping tariffs on imported textiles is one of the easiest and most effective things we could do to help poor Americans while also improving the prospects for economic growth in the third world.

Royal Wedding and the Case for Monarchy

With the United Kingdom enjoying some fun royal wedding planning and the forthcoming crowning of a new princess, I think it's a good opportunity to re-up my case for constitutional monarchy.

The point here is that it seems inevitable in any country for some individual to end up serving the functional role of the king. Humans are hierarchical primates by nature and have a kind of fascination with power and dignity. This is somewhat inevitable, but it also cuts against the grain of a democracy. And under constitutional monarchy, you can mitigate the harm posed by displacing the mystique of power onto the powerless monarch. We follow the royal family with fascination, they participate in weird ceremonies, they have dignity, they symbolize the nation, we all talk about them respectfully, etc. Meanwhile, the Prime Minister gets to be just another politician. Admittedly the one who's most important at this given moment in time. But that's no reason not to jeer at him during Question Time. He's not the symbol of the nation who's owed deference. He's a servant of the people and people who feel he's serving them poorly should say so.

Obviously, we can put this in the "not going to happen" file. But the people of Japan, Australia, Canada, the UK, Norway, Sweden, Denmark, Belgium, Spain, and the Netherlands should all, I think, consider themselves lucky to have ended up with this odd yet highly functional system of government.