Kasich beats Clinton handily — April 13, 2016

Kasich beats Clinton handily

If this is true, it’s further evidence for my claim that we need a different ballot, and need to dispense with the primary system altogether. If Kasich really could beat Clinton as lopsidedly as the article claims, then we have a voting system that is manifestly not designed to choose candidates whom the people would vote for.

The alternative is obvious: put all choices before all voters on a single ballot.

I wonder how many things that we ascribe to “polarization” — which seems like a large, intractable problem — could in fact be solved by a small-bore change in how our ballots look.

Peacetime hopelessness and Bernie — March 29, 2016

Peacetime hopelessness and Bernie

I don’t have time to expand on this idea as fully as I’d like, but just some quick notes:

  1. During World War II, the federal government managed the U.S. economy to an unprecedented extent, including price and wage controls, and (I just learned) limits on the production of durable goods. The durable-goods limits were so intense that the spread of television was delayed until the war ended.
  2. After the war, millions of Americans were able to go to college through the G.I. Bill.
  3. Clearly, when we want to make something happen, we can make it happen.
  4. It’s equally clear that we only believe we can achieve the impossible during wartime.
  5. I’ve seen no reason for this belief.
  6. It may be the case that World War II was singular and irreplicable. But I’ve not seen this argued. We have every reason to believe that if the country needed to gear up for total war, it could do so. All economic slack would be removed and the unemployment rate would effectively drop to zero.
  7. It seems clear that society has reached a point in its development where macroeconomic outcomes are all a choice. We choose to tolerate involuntary unemployment. We choose not to use the government as an employer of last resort. We choose not to build good mass transit, choose not to house the homeless, choose not to feed the hungry.
  8. American economic ideology is stuck in an earlier mindset, wherein these are not choices. If we don’t feed the hungry, it’s because we can’t afford it, and/or because of the moral failings of the hungry.
  9. People probably believe this ideology sincerely. It just happens that this ideology is convenient for those who don’t want to feed the hungry.
  10. The chink in the armor for those who support this ideology is the nearly instantaneous availability of cash whenever war calls for it. War is a choice we make available to ourselves; improving our society is not.
  11. The Sanders campaign has been attacked for the unreality of its economic plans. I’ve not investigated very deeply, but if Sanders’s plans are unrealistic, they’re probably unrealistic in not saying all of the above: that the money is available, and we spend it on wars without hesitation, and that we just need to turn our society’s focus from the violent destruction of life to the improvement of life. Sanders’s presentation (“millionaires and billionaires”) has been narrow and monotonous, and hasn’t really approached the full scope of what’s available to a modern society. If we wanted a Manhattan Project to give every child a college education, we could do it. If it were a Manhattan Project for bombs, we could do it. There’s no reason to believe that a Manhattan Project for college is more difficult.
  12. The argument against Sanders is essentially an argument for hopelessness.
  13. I don’t mean that in a disparaging way, actually. Who knows: it may in fact be hopeless to dream of achieving Sanders-like outcomes. But what makes it hopeless is not a fact about reality or a fact about economics, but rather a fact about politics.
  14. So if you’re going to argue against the Sanders campaign, don’t argue it on the basis of economic reality or fiscal plausibility. Argue it on the basis of political reality. Because that’s the only real ground on which this opposition stands.
  15. If political reality stands between us and Sanders-like outcomes, and if we desire those outcomes, then it seems that the top question on everyone’s mind ought to be how to change political outcomes.
  16. By “changing political outcomes” I mean something like “making the results of our collective decisionmaking match the results of our collective desires.” If we, as a society, would prefer to have a tax-financed system of public universities that leave our students debt-free, but our political system doesn’t make that outcome feasible, then there’s something wrong with the way that our policy desires are translated into political outcomes.
  17. Which candidate is more likely to change political outcomes? The typical argument for Hillary is that we’re never going to change political outcomes if a Republican is elected, and that Hillary is the only electable one. The typical argument for Bernie and against Hillary is that Hillary wouldn’t do the right things if elected — that she’s too comfortable with the system as it is — and that she’d aim in the direction of the right policies without fundamentally changing the political structure. The argument against Bernie here is that he would be one man among many, and that his noble intentions would be crushed by the system. Bernie’s argument for himself is that his election would signal a political revolution; this would mean that the very organization of political life had changed.
  18. There’s a certain fashionable pessimism these days: our children will live worse lives than ours, globalization is destroying the American economy, and we need to settle for smaller dreams. These are all choices. If we, as a society, decide that we deserve better, and we choose to not achieve better, we are making a moral choice rather than succumbing to economic necessity.
Behavioral economics and retirement savings — March 26, 2016

Behavioral economics and retirement savings

This NYT article about using behavioral nudges to get people to save more is fine, so far as it goes. But it’s another example of policies which go through an outrageous amount of complexity to encourage people to do the right thing, instead of doing the right thing for them.

There are a lot of potholes on the way to a happy retirement. First is to save enough. Second is to save in appropriately diversified vehicles (e.g., index funds). Third is to choose a mix of assets that’s appropriate for your particular stage of life — e.g., more stocks when you’re young, and more bonds when you near retirement. Fourth is to not outlive your savings; the way to do this would be to buy an annuity, but the annuity market (as I understand it) is not as well developed as the rest of the retirement-savings industry.

So then we (as a society) compile all of this knowledge about financial best practices, then try to convince people to use it, then outsource preparations for retirement to employers, then encourage employers to nudge their employees into doing the right thing. Not only is this ineffective; it’s infuriating and exhausting.

Until fairly recently, we tried another outsourcing approach: encourage employers to provide pensions (“defined-benefit retirement plans,” in the jargon, as opposed to “defined contribution” plans like 401(k)s). Pensions required employers to set aside money today for their employees’ retirement, but this of course presents a problem: what if the employer goes out of business before paying out those retirement benefits? To address this possibility, we built a regulatory infrastructure to try to regulate these pensions. If all else failed, we created a government agency as a backstop.

Somehow the straightforward approach of just providing strong retirement benefits to all Americans, then paying for those benefits with progressive taxes, hasn’t yet taken hold. In the U.S., “inflation-protected retirement annuity with survivor benefits, paid for through taxes” is pronounced “Social Security.” Social Security is expected to be part of a three-legged stool, the other two legs of which are pensions (nowadays IRAs and 401(k)s) and private savings. Those other two legs are increasingly weak: the overall national private saving rate has been declining for decades, and briefly went negative in 2005. That savings rate already includes 401(k) and IRA contributions, so one of the legs of that stool is practically nonexistent. As for the 401(k) leg: only 66% of private employers even offer retirement benefits, and only about 3/4 of the people who have access to them use them. I can’t find statistics on how much people contribute to such plans, but the amount must be less than the low overall savings rate. [1]

In this light, behavioral workplace nudges to get people to save more seem like a last-gasp rearguard effort. If we, as a society, believe that saving for retirement is important, why don’t we, as a society, reflect this belief in our policies? The standard nudgey answer is “libertarian paternalism”: set appropriate defaults on retirement savings, and allow people to override those defaults if they wish. It seems pretty clear that libertarian paternalism doesn’t work. Libertarian paternalism seems like nothing so much as resignation in the face of a hostile political climate; it resembles the early Obama administration, hoping against all evidence that the GOP would take half a loaf. “Conservatives and liberals disagree on a lot of things,” I imagine libertarian paternalists saying, “but surely they’ll agree on market-friendly solutions like behavioral nudges.”

Even if these nudges worked, Social Security would still be better. First, there are enormous economies of scale from administering Social Security centrally rather than outsourcing pension management to millions of employers. Second, those employers can’t be expected to be any good at choosing retirement options for their employees. My employer makes software; it doesn’t make retirement funds. Why would we expect my employer to be any good at offering 401(k)s? Why would it want to offer 401(k)s? It wants to make software and it wants to lure talented employees with high salaries; all else is noise.

Social Security isn’t perfect. It’s not progressively taxed, for one thing: it’s a flat tax, and you don’t contribute on any dollars you earn above $118,500. It’s regressive on what’s paid in, but progressive in what’s paid out: higher earners can expect to get back a smaller fraction of what they paid into Social Security than lower earners do. And it only pays out $1,335 per month on average, which still amounts to 39% of elderly people’s income. So it needs to be more generous and more progressive. But it’s a start, and the infrastructure is already in place. Removing the taxable maximum would be a hard-fought battle, but would be comparatively easy to implement once we’d made the decision to do so.

I like to imagine a thought experiment. Back in 1970, I imagine someone told my parents (who weren’t yet parents) that in 50 years they would be nearly four times as wealthy as they were back then. My imaginary interlocutor would then ask my parents what to do with that windfall. They might have felt perfectly well off with the income they were earning back then, so the thought of quadrupling it might have seemed outrageous. Maybe they should set some of it aside for retirement? Set aside even more of it and allow themselves to retire early? How about setting aside some of it to provide the world’s best universities, for free? There’d be a long list of choices they could make. They could choose to buy a larger house, though maybe they’d look around at the house they have and think, “No, this is a fine size house; we’ll choose to spend our money on other things” (unlike Americans as a whole, whose homes are 42% larger at the median than they were in 1973).

Like Odysseus tied to the mast, every decision that my parents made in their mid-twenties would bind them in their working years and on into retirement, and the binding would be handled through the tax code. Would they lament the money that never made it to their wallets, but rather was spent on social goods? Rather than after-tax paychecks that were on their way to quadrupling, they’d get free university educations for their children, and they’d have enough money to retire comfortably. A lot of the arms races that we fight with our neighbors would never have been fought: rather than build a larger house simply because that’s what everyone around us does, and because we must keep up with the Joneses, the tax code would disarm everyone at once. To the extent that we build larger homes out of an arms-race mentality, rather than because any individual person wants a larger home, this multilateral disarmament would help everyone.

Of course this story isn’t complete. For one thing, real per-capita disposable personal income doesn’t capture the story of rising income inequality over the last 30-40 years; the story of American growth hasn’t been a story of rising tides lifting all boats. A more accurate measure might be median household income, which has barely budged since the early 80s. This may, in fact, strengthen my story. Which do we prefer, as a society: quadrupling our income, but putting most of that extra income into a few hands, or sharing it more broadly and investing in our future through strong public universities, public-health spending, and basic research that helps everyone?

The story of increasing wealth may also be missing a key component: health care. Maybe our parents would have loved to have set aside money to build for the future, but they didn’t have that choice: much of what would have gone into their pockets as increased wages went, instead, into health-care costs borne by their employers. First, I have my doubts that this was actually a problem: the real disposable personal income number already factors in the health-care CPI. And second, the fact of rising health-care costs in the U.S. results, at least in part, from our fragmented system of care. That is, rising health-care costs have been very much a social choice. Imagine again that our parents, bound like Ulysses, were asked in the early 70s to make a choice: organize medical spending in a deliberate way (à la the VA medical system, or à la Medicare), or continue with the chaotic and spectacularly inefficient way we’ve organized it.

Barney Frank is supposed to have said that “government…is simply the name we give to the things we choose to do together.” Let’s get back to thinking of things we can do better together, as a society. Social Security is a good start, but it’s just a start.

[1] – I don’t know whether home equity is counted in the NIPA definition of savings. Even if it is, I’m a little confused about how owners’ equity is counted. How could equity be cut in half and then return to trend? In any case, equity per capita only hit a peak of about $45,000, so it alone won’t rescue Americans’ savings rates. And we can’t compare savings rates to equity amounts; that’s comparing a flow to a stock. The relevant comparison would be either the rate of change in equity to the rate of change in savings, or the total amount of savings to the total amount of equity. I can’t figure out a quick way to do the former; the latter doesn’t seem particularly valuable.

Removing some veto points — March 23, 2016

Removing some veto points

Andrew Prokop’s piece about how a contested GOP convention could work is maybe the millionth data point from this endless election that convinces me of the need for a simpler election. Here’s how the election should work:

  1. You show up at the polling place. (Note that you’re only going to go to the polling place once in this process.)
  2. You face a long list of candidates. This year it’d contain Martin O’Malley, Bernie Sanders, Hillary Clinton, Donald Trump, Ted Cruz, Rick Santorum, etc., etc., etc.
  3. You rank-order your preferences. Or maybe you’d have a certain number of points you could allocate. Me, I’d put Hillary or Bernie at #1 and #2, or (depending on the day) the reverse. O’Malley would be up there, too. None of the GOP candidates would get any of my points.
  4. Tally up the candidates who got the most points. If anyone gets a clear majority of points, or of first-rank votes, that person wins. Otherwise we start considering second-place candidates; whoever gets more first- or second-place votes than the others wins.

None of this nonsense where you first have to do well in a couple randomly selected states (Iowa and New Hampshire) to drive “momentum”. None of the nonsense where the people who even bother to vote in primaries are the most politically engaged, so that a party’s choice of its nominee is driven by its most rabid members. None of the nonsense where people who are obviously never going to be the nominee (like John Kasich) stay in so that they can deny the frontrunner a majority of the delegates at the convention. None of the nonsense where people fear voting for Bernie or Nader because they worry about being a ‘spoiler’: under the sort of system I’m describing, you could have voted for Nader as your first choice in 2000; once he got a single- or low-double-digit percentage of the vote, the ranked-preference voting scheme would consider all the second-choice candidates. Since nearly everyone who voted for Nader as #1 would vote for Gore as #2, Gore would have won.

When this insane election is over, I hope the winner will help America by pushing for a sane ballot.

Matt Taibbi on Trump — February 26, 2016
When people in fifty years ask, “How could you have let this happen?” — December 8, 2015
I don’t think I’m out of line when I say that this scandal makes Benghazi look like Whitewater — October 23, 2015
I think I’m a Hillary voter —

I think I’m a Hillary voter

I was already going to vote for her, were she the Democratic nominee. But then I read the transcript of the first Democratic debate, where Bernie — despite how much I enjoy that cantankerous personality — did not acquit himself well, and Hillary showed herself absolutely in command.

Then there was today’s Benghazi hearing. What a spectacularly terrible joke, delivered by a roomful of defective assclowns. Would that we devoted a hearing — and built an entire Congressional committee around — the lies that got us into the Iraq War. (Four people died at Benghazi. Thousands had died in Iraq by 2013.)

Anyway, Hillary behaved in a statesmanlike way. And I’m realizing that the main gripe that anyone has about her — that she is, in some vague way, “untrustworthy” — is entirely a Republican invention; the media have beaten that drum for so many years that few people realize it’s been manufactured from thin air.

I’ll do the appropriate research, and I’ve not 100% made up my mind yet, but it’s becoming increasingly clear that none of the other candidates — in either party — holds a candle to Hillary in accomplishments or command of the issues.

File under “cult of the presidency” — October 19, 2015

File under “cult of the presidency”

Matt Yglesias has an important post this morning. He observes that Democrats are in the minority basically everywhere — in state houses, in governors’ mansions, and in the House of Representatives — and yet the party is engaged in a surreal debate over, as Yglesias puts it, “whether they should go a little bit to Obama’s left or a lot to his left” in Hillary or Bernie, respectively.

Yglesias drew some fire recently for a post that seems very connected to this latest one, wherein he noted that any successful Democratic president will have to operate mostly through executive orders, and that Hillary has shown herself particularly adept at handling those levers of power. The critics misunderstood him: he’s not happy about this. He’s on the record, indeed, with a post simply titled American democracy is doomed. The sort of (small-d) democracy wherein the executive branch has to operate mostly via executive order to get anything done is not a healthy one.

So at best, the Democrats can hope for little bits of change here and there, which will be stopped at the House of Representatives. Another option: a Republican president, Republican House, and Democratic Senate; along this avenue, the best Democrats can hope for is that the party gets to stop everything at the Senate door via the filibuster. (I’ll go on the record here: I want to see the filibuster ended, and I don’t want to see my party use it. I’d rather have representative democracy, wherein parties are elected and allowed to pass their agendas, and then voted out if the public doesn’t support that agenda. Instead we have the Republic of the Filibuster, wherein the public votes in a party and then is surprised when nothing is accomplished.) Worst, of course, would be a Republican lock on both houses of Congress, the Executive Branch, and the Supreme Court.

Yet when it still seemed like something that might happen, I had many conversations about whether Elizabeth Warren would run for president. Sure, I’d love a President Warren, and so would most everyone I know. The idea of a Warren presidency comes, unfortunately, from an infantile place: we expect that the president will solve all our problems. We expect an Aaron Sorkin presidency made flesh. Whereas in reality what the Democrats need is to build institutions. We need the steady accretion of power in the Senate. We need to undo gerrymandering in state houses. And yes, we need a president who knows exactly which executive-branch levers are available to her.

The president is not going to fix all our problems. The power of the presidency doesn’t operate through some invisible magic channel that only presidents have access to. And while I agree with Bernie that we’re not going to accomplish anything until Americans are organized, I’m doubtful that Bernie or Warren can singlehandedly orchestrate that long, hard work of organizing. The sooner we realize that a president is not going to be the liberal savior, the sooner we’ll start the grubby work of building liberal institutions up and down the ticket.

I appreciate the sentiment, but this is basically false — July 8, 2014

I appreciate the sentiment, but this is basically false

> Your health care decisions are not your bosss business, said Senator Patty Murray, Democrat of Washington
–[newspaper: New York Times] story about a Democratic bill to override the Supreme Court’s Hobby Lobby decision

I’m as unhappy about the Hobby Lobby decision as anyone else, especially since the U.S. Conference of Catholic Bishops say they don’t object to insurance covering Viagra. There’s an obvious double standard, and I hate it.

But really. Here’s reality:

1. By ‘Your health care decisions’, what Murray means is ‘what your insurer is required to pay for.’ Let’s be clear on that, because you can still go ahead and pay for contraception on your own. Again, I’d like to see insurance plans pay for contraception, but let’s be clear on what “Your health care decisions” means.
2. Your health-care decisions, by that standard, are never entirely up to you. Insurance pays for some things and not for others.
3. This would still be true even if — as I would prefer — we had a single-payer health system. The government would still pay for some things and not pay for other things.

I think it’s hopelessly muddled to frame this in the language of “your health-care decisions”. What the big debate is about is simply this: what do we believe that the our insurers — whether it’s the government or a private insurer — should be required to pay for? That’s an ethical and economic decision. And our insurers will sometimes make decisions at variance with our own ethics. And that sucks. Those on the other side would, presumably, say that it sucks when they need to go against *their* ethics to pay for something that they consider objectionable. My response to that would be: how far are you willing to take that? If my religion forbids male doctors from palpating naked female patients unless the doctor is married to the patient, are you willing to deny coverage in that case? Are you willing to make female patients seek out female doctors if they want the insurer to pay for it?

Indeed, I think I need to read more on the Religious Freedom Restoration Act and the Hobby Lobby decision, because I’m confused why religion here doesn’t excuse just about everything. SCOTUS describes the RFRA as follows:

> The [RFRA –SRL] prohibits the Government [from] substantially burden[ing] a persons exercise of religion even if the burden results from a rule of general applicability unless the Government demonstrates that application of the burden to the person(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest. 42 U. S. C. 2000bb1(a), (b). As amended by the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), RFRA covers any exercise of religion, whether or not compelled by, or central to, a system of religious belief. 2000cc5(7)(A).

I’m tempted to find some excellent regulatory arbitrage out of this, whereby I can make a lot of money by hiding fraud under cover of religion. More than that, though, I find it offensive that I have to pay, through my taxes, for wars that I don’t agree with. Did the government use the least restrictive means of furthering its compelling government interest in destabilizing Iraq when it taxed me? Okay, arguably yes. Was the government’s decision to require coverage of contraception 1) not in furtherance of a compelling governmental interest? Or was it 2) not the least restrictive means of furthering that interest? I guess I need to read the decision.

So anyway: yes, this sucks, and it conflicts with my ethics. Let’s be clear that this is an ethical objection, not an objection — as Murray would have it — about someone interfering in your health decisions. Someone’s always going to interfere in your health decisions.