Saturday, July 7. 2012
I more or less gave up on reading Matthew Yglesias's blog shortly
before he moved to Slate, and have rarely looked at him since. Don't
know whether I will much in the future, either, but I thought I'd
give him another try, and scrolled through a month's posts -- he
does produce a lot of material. And I pulled out the most interesting
quotes below -- generally (but not always) things I agreed with.
Would have pulled out a different set if I tried to critique him:
I'm not convinced by his knee-jerk efforts to find market mechanisms
(or at least tax manipulations) to solve all problems, and he has an
anti-left streak that often slips into mere contrarianism. And I'm
not sure what I think of his urbanism -- obviously something that
means much more to him than to me.
Reversed the order, so the old stuff is first. Not sure if it's
worth digging back deeper, but I was getting diminishing returns --
a lot of his posts have a pretty limited shelf life.
Private Equity Is Unpopular [06-08]:
One of the most shocking moments of media out-of-touchness that I've
seen in my lifetime was the spasm of pundits acting as if Barack Obama's
criticisms of Mitt Romney's business record were likely to prompt some
kind of backlash from the public. Obviously a rich man who makes
decisions that ruin some families lives in order to get even richer is
engaging in behavior that the median voter is going to find disreputable.
Low-Wage Labor and Its Complements [06-08]:
Speaking with Fareed Zakaria, Kansas Secretary of State Kris Kobach
argues for severe curbs on immigration and in the process ends up
revealing a pretty shocking level of ignorance about the agricultural
economy for a Kansas politician. Adam Ozimek shows that Kobach seems
completely unaware of the extent to which the American farm sector
is operating in an international context.
But I think Kobach's fundamental problem -- as is often the case --
is a failure to recognize that there are different factors of production
and they complement each other. A farm is a place where labor, machines,
fertilizer, and land all come together to produce some grains, fruit, or
vegetables. To simply assume that if you cut off the supply of cheap
immigrant labor will raise wages ignores the very real possibility that
simply less land will be cultivated. Even if you ignore the international
dimensions of the issue, Americans don't have a fixed totally
price-insensitive appetite for foodstuffs. If you restrict the supply
of agricultural labor you'll have less agricultural output and fewer
acres in cultivation. [ . . . ]
No factor of production is an island, and creating scarcities of
one factor damages the others.
Job-Creation Is the Fed's Job [06-12]:
My former boss Michael Tomasky has a column up arguing that Obama should
offer a one-year extension of the Bush tax cuts in exchange for Republicans
agreeing to spending-side stimulus. His logic, I think, is fairly impeccable.
Republicans will probably turn this down, which would be advantageous to
the White House in the politics of taxation. And if they say yes, it's a
win for the White House because both sides of the deal will pack some
short-term job creation punch.
Where I think it all breaks down is that once again we have liberals
ignoring monetary policy. The big risk that Obama faces with his American
Jobs Act is that in the scheme of things even the rosier estimates don't
have it massively accelerating the recovery. What's more, as I write in
my latest column there's a real risk that anything that did have huge
positive impact in the labor market would get crushed by the Federal
Seems to me like a dumb proposal all around. The Bush tax cuts are
so weighted to the rich that they offer no practical stimulus. Get rid
of them and the long-term balance sheet, which is what has hung over
the entire austerity drive, clears up. Ideally you'd like to do more
than that, but blowing the 2010 election cost Obama that option. Now
all he can do is campaign against the Republicans for blocking every
constructive plan he puts forth, and that campaign is weakened by
cutting deals with the devil. As for the point about the Fed, Obama
screwed himself by reappointing Bush's chairman (Bernanke) instead of
getting his own guy on the job (even if it was only Larry Summers):
single dumbest mistake he made (unless it was escalating Afghanistan,
or failing to repeal and restructure the Bush tax cuts at the start,
when he had the numbers; oh well, there are so many).
Obama on the Economy [06-14]:
If you wanted a concise version of the speech it's this. Obama thinks
there are a lot of worthwhile things the public sector does -- give old
people health insurance and pensions, build transportation infrastructure,
finance K-12 schools, subsidize college tuition -- and that in order to
pay for those things we should raise taxes on high-income people. Romney
thinks that higher taxes on high-income people people would be really
bad for economic growth and that Obama is overestimating the value of
these public sector undertakings so we should cut them instead.
Unfortunately, far and away the least plausible portions of the speech
were the ones where Obama tried to explain how re-electing him would lead
to his vision becoming law. He's quite persuasive on the point that an
Obama re-election would block Romney from doing various perhaps-objectionable
things. But the idea that a second term for Obama will change the fact that
41 Republican Senators can and will filibuster any Obama ideas that they
don't like (i.e., basically all of them) doesn't add up.
The Affordable Care Act and the American Disconnect [06-18]:
The Affordable Care and Patient Protection Act (aka "ObamaCare") will,
for better or for worse, take a large number of Americans who currently
can't afford health insurance and either give them insurance or else
give them money to buy insurance with. Obviously, if you're a person
like that there's a lot to like about this law.
But Washington, D.C., political and media circles don't involve many
people like that. Or even many people who know any people like
that. So even though this town contains plenty of folks who perfectly
sincerely want to help low-income Americans get health insurance (the
law wouldn't have happened otherwise), it's still seen in political
journalism as primarily a political story about "winners" and "losers"
in various congressional, media, legal, and electoral arenas. But for
millions of currently uninsured Americans, it's a real-world story
about a potential financial windfall or fiasco depending on how the
Supreme Court rules. Alec MacGillis ventured out in the real world to
talk to impacted people, and the
story is both emotionally touching and politically telling.
The key punchline is that, basically, the folks with the most to
gain from the new law are barely -- if at all -- aware that it even
The Forgotten Flip-Flop: 2003 Medicare Reform [06-19]:
The Republican version of a Medicare benefit seemed to me to be a tactical
retreat. Democrats had a much more progressive bill to achieve this purpose,
so I thought the GOP had ginned up an alternative to muddy the waters but
fundamentally had no particular interest in a very expensive addition to
Medicare. But they did. It was a hard lift whipping the votes in the House
to pass the thing since many conservatives objected, but they got it done.
And in an odd coda, the bill's passage was integral to the birth of the
Affordable Care Act. That's because the deficit-financed subsidies to private
insurers inside Medicare became offsetting spending that Democrats could cut
in order to make Obamacare deficit-neutral. If the Bush administration had
never created that program in the first place, Democrats wouldn't have been
able to cut it later on and use those savings to finance their own health
care bill. They'd have either had to write a much stingier program or else
include substantially more in the way of tax hikes. And yet even though the
2003 Medicare bill was controversial at the time, it seems to have basically
been eliminated from memory. Now all good Republicans are against spending
money on anything, but nobody proposes to repeal the basic benefit. It's as
if the whole thing never happened.
America's Fiscal Union in Action [06-25]: with map of "Federal taxes
minus spending, 1990-2009, as % of 2009 GDP":
Two key points I would make about this in relation to the eurozone are
that these transfers are both really big and extremely persistent.
Mississippi and Alabama have lagged behind the rest of the nation in
economic development for a very long time, and I see no particular
reason to believe they'll ever catch up. Residents of economically
backward and politically dysfunctional states can and do exercise
their right of exit rather than sticking around and solving problems,
and the availability of large and persistent fiscal transfers means
that local political elites focus their energies on rent-seeking
rather than development. Other places such as Florida and Arizona
develop regional economic specialization as low-wage high-temperature
retirement zones living off incomes earned in more dynamic economies
The Affordable Care Act vs. the Dentists' Cartel [06-26]:
One of the tragedies of the Affordable Care Act debate is that for
all the pixels spilled over it, there are still dozens and dozens of
provisions that have barely been discussed. I, for example, am more
interested than your average person in the issue of how dentists extract
regulatory rents from patients and dental hygenists through rules that
make it illegal for hygenists to offer teeth-cleaning services to people
unless they're employed by a dentist. And yet until Jon Chait reminded
me yesterday, I'd completely forgotten that one element of the Affordable
Care Act tackles this issue, prompting furious backlash from the dental
lobby. [ . . . ]
One problem with reforming dental regulation to help patients is that
the dentists are a concentrated interest that's more able to lobby
effectively than are the disparate interests of patients.
Globalization and Labor Unions [06-27]:
What's probably true is that not globalization but policy that has
the United States running a perpetual trade deficit has been bad
for labor unions by depressing manufacturing employment. That speaks
not to the level of trade, but to the structure of the American tax
code and to the nature of American currency policy.
I'll add that the US trade deficit is one of the main ways we
transfer money to the rich: the dollars that working people pay for
foreign-produced products return to the US to bid up the price of
assets (with much of that filtering through the banking industry,
and sticking to greedy fingers along the way).
John Roberts Saved America From Socialized Health Insurance [06-29]:
I'm not a mind reader, but I think I have a more convincing explanation
of why John Roberts ultimately voted to uphold the Affordable Care Act
than these theories that rely on a bankshot "long game" to alter Commerce
Clause jurisprudence. My theory is that he embraced the individual mandate
for the same reason that Mitt Romney embraced it as governor of Massachusetts
and Bob Dole embraced it as minority leader of the U.S. Senate -- it's a
reasonable mechanism for ensuring universal coverage without creating a
government-run single purchaser of health care services.
A lot of attention has been paid recently to the fact that once President
Obama came to embrace that position, the conservative movement rapidly
abandoned its own alternative to single payer. But the plaintiffs in the
health care cases weren't just asking the court to veto the law, they were
asking the Supreme Court to declare the middle ground alternative to be
now and forever impermissable.
If that had happened, liberals would have had no choice but to start
campaigning for Medicare for all.
Of course, Roberts got nothing but grief for his efforts. The most
striking thing about the right wasn't the hypocrisy -- it was, after
all, their plan -- but their rabid sense of entitlement, how convinced
they always are that they should be able to dictate whatever policy
madness takes over their fevered brains.
Opening New Patent Offices Won't Fix America's Broken System
It's hardly the fault of the career staff (as opposed to, say, judges
and Congress), but this is incredibly lame. The presumption here is that
the problem with the patent system in the United States is that we're
somehow not efficient enough at transforming patent applications into
patents. The actual problem is that the underlying presupposition that
it helps the economy to engage in profligate granting of
Power Tools: The Libraries of the Future [07-03]:
It's in the nature of books that the vast majority of books any given
person owns will not be in use at any given time. Under the circumstances,
establishing vast municipal stockpiles of books for people to borrow is
much more efficient than relying on a series of household stockpiles.
But over time digital technology is eroding this rationale (the day has
not yet come when every individual is equipped with a smartphone or
tablet capable of reading e-books but it's quite foreseeable), and it
makes more sense to shift away from stockpiling of books and toward
things like the Oakland Public Library's tool lending program. I have
a hammer, several scredrivers, a power drill, a hacksaw, and a bunch
of other tools that I'm almost never using and households all over DC
are in this very same position. The most successful libraries we be the
ones who spend less time thinking "how do I extend my traditional
reading-and-learning mission into the digital age" and more time
thinking "what sort of club goods are being underprovided thanks to
transaction costs, enforcement problems, and information issues."
We Have Too Many Patents, Not Too Few [07-06]: quotes Richard
Posner: "It's not clear that we really need patents in most industries."
I don't think it's clear that we need patents for pharmaceuticals either,
but we do need something. Proposals to reform pharma patents
typically involve some alternative mechanism for financing innovation.
I would tax pills and use the money to finance prizes. But the point is
that in many industries you could just scrap the patents and that's your
solution right there.
It's particularly good to see Posner on this bandwagon because to an
extent the conventional wisdom on the patent situation in digital
industries has been cleaving along a "geeks vs lawyers" axis of
polarization. Posner is a very famous legal scholar, and should help
get the geek point of view much-needed exposure in law schools.