Robert's Stochastic thoughts

Saturday, December 01, 2007

Abbott and Costello do Australia

Ah Joy. Turns out that the Howard's End election in Australia has caused a farcical collapse of the Liberal (read conservative) party which has had some difficulty choosing a leader to replace Howard. They are not subtle down under, so two of the leading non leaders are named, I kid you not, Abbott and Costello.

John Quiggin reports

First, Howard’s deputy and longstanding rival Peter Costello announced, contrary to most expectations, that he would not serve as leader of the opposition and was looking to get out of politics and into business where he could make some real money.

and

The last prominent conservative left standing at this point, Health Minister, Tony Abbott, announced he would run for the party leadership but withdrew when it became apparent he didn’t have the numbers.

Who's on first ?

The liberals finally settled on another guy with two first names Brendan Nelson as they seen to have trouble with silly sounding last names.

The part I like best was the explanation of Downer going Down Down Under.

In the middle of the post wonderful John Quiggin writes

And there was more to come. Foreign Minister and Mark Steyn fan, Alexander Downer decided he would also head for the backbench (it seems likely that he and Vaile will face a lot of trouble for a deal in which a government-established monopoly paid Saddam Hussein kickbacks, out of Iraqi Oil-for-Food money, to buy Australian wheat, right up to the day Australian forces took part in the 2003 invasion).

Makes me want to eat some vegemite.

Friday, November 30, 2007

Overconfindence ?

Waaay back in 2006, commentators older than about 35 were confident that the Democrats were going to crush the Republicans. Relative youngsters couldn't quite believe it as they had never seen such a thing. Now a real youngster seems to me to be going too far the other way.

Ezra Klein who is old enough to drive a car, vote and even drink (although he does get carded) writes

The danger we face in trying to pressure the media to report stories like the US Attorney purge or Giuliani's criminal misuse of NYC money is that we'll only be able to change the prevailing narrative rather than actual journalistic practice. Broder is mythologically committed to his perverted "centrism" rather than ideologically committed, and the same is true for the rest of them. We can change the myth; the GOP has the route all mapped out, and that destination is easier to reach with all of the technological tools available to us now.

OK so just changing the myth isn't enough for Mr Klein. Nooooo we have to not only crush the Republicans but also reform the media and find the holy grail.

A commenter named ~~Klein~~ Ezra* writes: I didn't write that. Stephen did. And he's a bona fide adult, with a kid! (One might wonder if this calls into question the utility of using age as a framing device for accuracy...)

OOOOOOPs (blush) but at least he noticed me. I didn't mean young therefore inaccurate I meant young therefore with fewer emotional scars from horrible elections from 1980 on (and also to make me feel old).

correction correction: The commenter called himself "Ezra" not "Klein". I am not senile, I was always this sloppy.

This Time I agree with Krugman's criticism of Obama

Obama argues against mandating that people get health insurance. Krugman explains the logic of mandates

Krugman writes

under the Obama plan, as it now stands, healthy people could choose not to buy insurance — then sign up for it if they developed health problems later. Insurance companies couldn’t turn them away, because Mr. Obama’s plan, like those of his rivals, requires that insurers offer the same policy to everyone.

As a result, people who did the right thing and bought insurance when they were healthy would end up subsidizing those who didn’t sign up for insurance until or unless they needed medical care.

That was quick and clear (how does he do it?).

Mr. Obama claims that mandates won’t work, pointing out that many people don’t have car insurance despite state requirements that all drivers be insured. Um, is he saying that states shouldn’t require that drivers have insurance? If not, what’s his point?

Look, law enforcement is sometimes imperfect. That doesn’t mean we shouldn’t have laws.

Krugman refers to his earlier opposition to Obama's proposal to raise the FICA ceiling where he argued that increasing taxes paid by the richest 6% of earners is right wing (huh?). That was silly, this is not.

However, I also agree with Kevin Drum that actually explaining how a mandate would be enforced is a major political looser (especially if it is based on the IRS as Edwards' plan is).

I'm sure Krugman does too, preferring a plan which just gives people insurance and pays for it with taxes to an individual mandate, which will amount to a regressive tax even though the relatively poor will get a discount.

I have a plan. Raise taxes but introduce a deduction for people with health insurance so
1) middle class insured people will pay less
2) rich insured people will pay more
3) the uninsured get insurance which is expensive if they are rich or cheap if they are not.

I think increasing the progressivity of the tax code is an excellent policy for many many reasons and also the cure for progressives political problems.

A problem with this is that it makes the 1040EZ more complicated, and people have to demonstrate coverage which would be a hassle.

A worse problem is that Republicans will lie calling a tax increase for the rich combined with a tax cut for the non rich a tax increase. The worst problem is that that journalists will mostly aid the Republicans.

I wish I had an explanation other than the theory that pundits and top journalists are rich and willing to lie to protect their after tax income, but no one has told me of any.

Fanntastic ! Neil the Ethical Werewolf adds an extra n to Paul Waldman's name over at Ezra Kleinn's place. Obviously people often make the opposite mistake with my nname.

Wednesday, November 28, 2007

Lufthanza out of touch

Turkey was served on November 26th on Lufthanza flight 415 from Washington to Munich.

Saturday, November 24, 2007

Atrios writes

As Predicted

Awesome that Social Security is now a central campaign theme. Given that Obama's now ruling out benefit cuts or the raising of the retirement age that leaves... a tax increase.

-Atrios 16:35

I comment.

Obama ruled out benefit cuts or raising the retirement age in the advertisement with which he first raised the issue (in text which flashed on the screen). Your use of "now" suggests that you weren't paying attention.

So yes that leaves a tax increase as oritinally proposed by Obama and as is supported by a majority of Americans according to every poll of the issue.

So what we have is Obama proposed increasing taxes on the richest 6% or earners and roughly 60% of Americans agree with him. What a disaster.

I don't always agree with Black but this is the first time I have been irritated by his willful ignorance.

Howard's End

Mini poodle told to take a walk.

Now I think this is the end of his career, but I do recall the one thing he ever said which I liked. Some time ago John Howard lost a general election then lost a leadership contest, then said "Lazarus with a triple bypass couldn't come back from a defeat like this." But he did.

Friday, November 23, 2007

Jonathan FBD Weisman demonstrates his profound understanding of recent political events

In a washingtonpost.com online chat with congressional reporter Jonathan Weisman in May, a questioner asked “why Congress didn’t jump on Monica Goodling’s testimony about caging.” Weisman’s response: “So what is this caging thing?”

via think progress

Standing up for the downtrodden who only make $160,000/year

Matt Stoller objects to a silly New York Times article. He particularly objects to this passage

But while some of these benefits take the form of highly practical solutions - like on-site child care - others raise questions whether law firms are subsidizing a cushy lifestyle.

"As if a $160,000 starting salary wasn't enough for associates" fresh out of law school, "yes, there's more," said Peter Johnson of Law Practice Consultants in Boston.

As Atrios notes, employers providing pay and benefits to employees are not subsidizing, whether or not there are contracts requiring them to provide such benefits.

However, Stoller has a very odd interpretation of the ideology behind the article
asking "Why Does the New York Times Hate Wage Earners?" in the title of the post and concluding

It's the pain caucus, always, brought to you by the DC Villagers, and it's a subtle propagandizing force that says there are billionaires, power players, and celebrities, and then there is the vast useless consumer horde that should just take what they get and like it.

Stoller presents no evidence supporting his conclusion that NY Times reporter LYNNLEY BROWNING thinks that law associates' excessively cushy lifestyle is being financed at the expense of the legitimate rights of the partners who decided to finance it. I would tend rather to suspect that Browning thinks the lifestyle is unfairly cushy compared to Browning's life style.

The article provides no hint whatsoever of concern for the poor partners. To a considerable extent it seems to me to be celebrating the new perks as a sign that young "top-notch" lawyers want a life and not just a lot of money. The complaints seem to me to be of the form of people saying that young hot shot lawyers are too privileged compared to normal people.

The article strikes me as being populist, noting the extreme advantages some people get from the normal operation of the market system. It makes me think that maybe these high income people can afford to pay more in taxes. Of course everything makes me think that.

The truly strange thing is that Stoller contrasts wage earners (meaning salary earners too) and the power elite. Uh Matt, CEOs have salaries too. So do pundits.

Matt Stoller, why don't you check out Emanuel Saez's home page, click on (TABLES AND FIGURES UPDATED TO 2005 in Excel format, October 2007) (4 lines under the heading "income and wealth inequality") and look at figure 4.

You will find the estimate that about 37% of the income of the richest 0.01 % in 2005 is "wage income" (Picketty and Saez's term). Entrepreneurial income (like partners' shares) is about 37% and capital income 27%. In 2000 the 60% of the income of the richest 0.01% was "wage income". The share of "wage income" is, of course, higher for the suffering masses who are in the top top 0.1% but not the top 0.01 %.

Stoller seems to be imagining things are as they were in 1929 when the vast majority of the income of the super rich was capital income.

The set of "wage earners" is no longer a subset of "non obscenely wealthy people."
The poor 25 year old associates trying to repay student loans and survive on $ 160,000 a year are not super rich, but thinking something should be done to help others share their good fortune is populism not anti-populism as Stoller imagines.

Sebastian Holsclaw writes in a comment on Brad DeLong's blog "Since he shows that university based drug development rarely can get past the target pointing phase, this statement suggests that you (Robert Waldmann) aren't being "fact based" in your conclusion-reaching."

Azoulay, Michigan and Sampat present a figure in the New England Journal of Medicine vol 357 no 20 p 2053 which shows that, in the most recent ten years for which data are available, roughly 20% of biomedical patents were awarded to academic institutions. The discussion is clearly ambivalent as the authors note the view that this demonstrates greed and restricts research as well as the view that this shows that the academy is doing useful applied research and development. Obviously pharmaceutical companies are not affected by such ambivalence, so one would expect the ratio of patents to useful inventions to be higher in industry than the academy.

I note that the source cited by Sebastian Holsclaw is a blog and that the archive category which I read from beginning to end on Holsclaw's recomendation contained no quantitative data on drug development (it did contain quantitative data on clinical trials which, if it were relevant, would not support Holsclaws claim).

It is certainly true that pharmaceutical patents are a subset of biomedical patents, but, since Holsclaw was commenting on a post which discussed the development of a device not a pharmaceutical, the appropriate figue to assess his view that my conclusion-reaching is not "fact based" are the ones which show that Holsclaw's criticism is not fact based.

What is to be done ?

Reform corporate governance or executive compensation ?

Paul Krugman explains the problem

“What were they smoking?” asks the cover of the current issue of Fortune magazine. Underneath the headline are photos of recently deposed Wall Street titans, captioned with the staggering sums they managed to lose.

The answer, of course, is that they were high on the usual drug — greed. And they were encouraged to make socially destructive decisions by a system of executive compensation that should have been reformed after the Enron and WorldCom scandals, but wasn’t.

[snip]

another part of the answer lies in what hasn’t happened to the men on that Fortune cover — namely, they haven’t been forced to give back any of the huge paychecks they received before the folly of their decisions became apparent.

[snip]

The point is that the subprime crisis and the credit crunch are, in an important sense, the result of our failure to effectively reform corporate governance after the last set of scandals.

Note that he shifts from a criticism of current executive compensation systems to a proposal to reform corporate governance. The idea is that, since executive compensation is both directly costly and promotes reckless decisions and fraud, shareholders would reform it in their own interests if they controlled corporations in practice as they do in theory.

It is inconsistent with free market principles for the government to regulate executive compensation directly.

The problem is that it is very hard to reform corporate governance. The current problem is due to the fact that shareholders rationally diversify so they are rationally poor citizens of each shareholder's assembly. The only shareholders with clout are institutional investors run by managers who are compensated based on the illusion of success. That is, who will watch the watchers ?

I think that we will be able to inscribe "corporations must maximize shareholder value" on our banners about two weeks before we inscribe "from each according to his ability, to each according to his needs"

so What is to be done ? Hmmm how about raising taxes on high income individuals. Yes I know that this is my solution to everything, but this time I have an argument.

High tax rates on huge incomes can have exceptions for socially desirable forms of executive compensation. That is the state can perfectly well say "do it this way or give me 60% of the money" without offending against the constitution or anything.

So the idea is we decide how we want executives to be compensated and oblige them to compensate themselves that way or pay huge amounts of taxes.

The problem, as Krugman notes, is that executives can cash in before the crash and shareholders can't get the money back. This would not be true if compensation was in the form of stock or stock options which could not legally be sold, that is which are a non transferable claim on a stream of dividends. A bit extreme perhaps as it would clearly distort dividend payout policy.

A less extreme version would be a restriction on assets that executives could own other than own firm shares. That is ban cashing in by requiring executives to commit to not owning cash in order to not pay huge taxes. They would be allowed to sell shares of their own firm to consume the proceeds.

It would be necessary to restrict their giving too, so they don't give the shares to family and friends in exchange for secret informal claims on the proceeds of sales.

This proposal would absolutely prevent the housing crisis from causing a recession in the near future, as the way to invest while calling it consumption is to buy houses. The executives evading my scheme would suddenly claim that they want hundreds of houses to live in. Executive compensation laundering through investment in housing would get us over the current bursting of the bubble.

When the CEO's die their heirs would dump the houses on the market. Apres moi le liquidation.

Thursday, November 22, 2007

IQ G

The dread IQ debate is back due to the arrogant ignorance of William Salaten.

One of many excellent debunkings is was written by Daniel Koffler at Jewcy.

Key points is that the time trend of measured IQ is huge and positive (on the order of 3 points per decade) demonstrating the importance of environmental factors and that, according to (different) scientific racists, the brain size of Asians used to be lower than that of Whites and is now larger. You know all that economic success gave them swollen heads.

I disagree with one claim made by Koffler. It is very commonly made by critics of the genes to IQ to everything crowd. It is also clearly false.

It concerns g

g, the general intelligence factor, which in its initial formulation by Spearman is the quality that all tests of mental ability measure in addition to any specific qualities, and is still supposed today to be responsible for a significant proportion of observable correlations in performance among standardized tests, and between tests and academic performance. If g does not exist, then there is no one quality that even a perfectly designed intelligence test would measure,

Koffler argues

Cosma Shalizi, a statistician at Carnegie Mellon, offers an exhaustive exploration of the mythical existence of g, the bottom line of which is that factor analysis, without which we would have no concept of g, while useful for descriptive statistics, is virtually useless for doing explanatory statistics. That is, if you already know that some given abilities are interdependent, a factor-analytic examination of them could greatly simplify the explanatory picture. If, on the other hand, you are seeking to explain correlations among variables, all that factor analysis can do is confirm your pre-theoretical biases. In other words, when Spearman, or Rushton and Jensen, or Herrnstein and Murray, or Saletan look at IQ test data and infer a general factor behind the results, they are doing nothing but gazing in the mirror.

Hmmm what is Shalizi saying ? Is he* saying that the statistical analysis that yields g has no empirical content, because estimation of principle components analysis must yield a principle factor ? This is certainly not what he means as he is a statistician and knows better. If you have multiple variables, you can find a principle component which is correlated with each of them. However, nothing implies that such correlations are positive. It is an empirical fact that the scores on many different tests of cognitive ability are positively correlated. It is thus an empirical fact that when one calculated principle components, the first component is positively correlated with scores on tests of verbal, spatial and mathematical ability.

This doesn't mean that all mental abilities are positively correlated with verbal, spatial and mathematical ability. It has nothing to do with the question of heritability as far as I can tell. It is an empirical observation. It is not the necessary result of applying the statistical technique.

* I'm not sexist I checked that he is a he and discovered he looks even more like Trotsky than I do.

update: That is actually a photograph of Trotsky. I hope people believe that gullibility is not negatively correlated with g.

update: from comments Cosma Shalizi himself writes

I uses that picture of Trotsky because I do, in fact, look him; people have recognized me at conferences from it...

The empirical fact is simply that the test scores are positively correlated with each other. Given that, factor analysis (which is not quite the same thing as principal component analysis) is guaranteed to find a common factor on to which the observables load positively. (This follows from the Frobenius-Perron theorem on the leading eigenvectors of positive matrices.) Moreover, the fraction of variance "explained" by the leading factor will typically be quite sizeable, even when the correlation matrix is basically random.

All-positive correlations can arise in many ways, including (but not limited to) ones in which the actual abilities are completely uncorrelated, but all your observables are very crude measurements which sum many abilities. So discovering that factor analysis gives us positively-loaded a common factor in no way explains the positive correlations; if anything the explanation runs the other way. Hence factor analysis is (in this way, at least) unable to tell us about the causal structure. For that matter, such artifacts of bad measurement procedures can have arbitrarily high heritabilities.

I should note that Cosma Shalizi's web page clearly states that the photo was chosen to make him look "older and more important" than he is. I think I look slightly like Trotsky, although it might be mainly just grooming. Face recognition is a particular mental ability and I am bad at it. It develops extraordinarily late. Kids are fooled by fake beards and such. I can remember when I was about 10 watching some dumb cop show on TV when the police note that a photograph of a man with long hair glasses and a beard is of a bald suspect wearing a wig and non-prescription glasses. I did not recognize the face although it was obvious to my father.

Tell me if my belief that I look sortof like Trotsky demonstrates lack of face recognition ability (comments on my nose will not be appreciated)

Photo Sharing and Video Hosting at Photobucket

As Cosma Shalizi notes a one dimensional common factor from principle components analysis does not at all imply that causal common factors are one dimensional. To interpret the analysis that way is, indeed, the mistake of mistaking a choice of technique for a discovery. For example I would have a very low score on all parts of a written IQ test used in Japan, because I don't understand the questions.

Now I speculated that there are forms of cognitive ability which are not correlated with verbal, mathematical or spatial ability. I don't know what I am talking about, but I think that one might be "social intelligence" as in getting hints and not irritating people. A huge fraction of our mental effort is devoted to winning friends and influencing people. Everyone seems to think that social intelligence is negatively correlated with the sort of cognitive abilities measured by IQ tests and, in particular, mathematical ability. I'm sure serious research has been done on the topic.

Big Brother is helping you get clean.

I just read some of a pdf article by Mark Kleiman on what to do with drug addicts (via Yglesias). He is very convincing as usual. He argues for something in between locking addicts up and treating them as free responsible adults, basically testing them for drug use frequently with quick certain but not ruthless sanctions for failing or missing drug tests. Clearly the legal basis for this is a conviction and sentence to a kind of parole.

I had a (dumb) thought.

It is possible to enforce parole with bracelets which report the location of the parolee. I don't think this is done as much as it should be. It is possible to detect drug use with methods which aren't too invasive by measuring pulse and or skin conductivity. I wish there were bracelets which report where people are and whether they have recently used day cocaine and/or methamphetamine, that is if they are sweaty with racing hearts.

Hmm what about athletic ex addicts. Well it is easy for a non invasive big brother bracelet (bbb) to see if people are performing sports as people tend to bounce around when doing it.

So is there any way in which the bbb would amount to the worst possible invasion of privacy, any false alarm based on an activity which people generally want to keep private ? You know more than any other activity.

A yes. blush.
back to the drawing board.

Wednesday, November 21, 2007

Washington Post Haters Vindicated ?

What are the limits of he said/she said ? Is a universal consensus among independent scientists concerning a matter of natural science enough ? Not if a policy debate is involved.

www.washingtonpost.com has this headline
"Stem Cell Foes Vindicated?"

which links to

"A Scientific Advance, a Political Question Mark

By Michael Abramowitz and Rick Weiss
Washington Post Staff Writers
Wednesday, November 21, 2007; Page A04 "

The article reports debate about recent scientific articles on adult stem cells which discuss possible approaches to stem cell research which are not blocked by Bush's ban on the use of human blastocysts.

The article does not discuss the ethical debate about the use of blastocysts which must be protected from scientists so they can be routinely disposed of by fertility clinics. Thus it should be an article about science and whether the critics of stem cell research have been vindicated by the new research. Let's check the view of the single solitary person quoted in the article as someone who actually contributed to the new research and is an expert

One of the researchers involved in yesterday's reports said the Bush restrictions may have slowed discovery of the new method, since scientists first had to study embryonic cells to find out how to accomplish the same thing without embryos.

"My feeling is that the political controversy set the field back four or five years," said James Thomson, who led a team at the University of Wisconsin and who discovered human embryonic stem cells in 1998.

Hmm is that a vindication ? Doesn't sound that way to me. And this is one of the people whose contributions are flagged as a possible vindication of Bush in the headline.

On the other side Abramowitz and Weiss have a lawyer (Carter Snead, former general counsel for the President's Council on Bioethics, now on the faculty at the University of Notre Dame Law School) and the former editor of American enterprise, Karl Zinsmeister. Ah yes lawyers' expertise in developmental biology is well known.
Wikipedia on Zinsmeister's expertise in biology "Zinsmeister is a graduate of Yale University in New Haven, Connecticut and has also studied history as a special student at Trinity College, Dublin, Ireland."

I stress that this is an article about the science of stem cells. It does not claim that there are new insights into ethical or legal issues. Yet there is not one single solitary scientist quoted in the article who is willing to answer the headline's question in the affirmative.

James Thomson isn't the only scientist quoted in the article.

"While this is exciting basic research, it could still take years to get this to work in humans in a way that could be used clinically," said Robert Lanza, chief scientific officer of Advanced Cell Technology in Worcester, Mass. "I cannot overstate that this is early-stage research and that we should not abandon other areas of stem cell research."

Lanza is quite right. He can not possibly stress it enough to convince the Washington Post to place the opinions on science of scientists on the same level as those of lawyers and former special students of history. He shouldn't feel bad. I don't think it is possible to stress anything that much.

Update: I decided it would be bad for my health to read Ruth Marcus's column "Krugman vs Krugman." Fortunately Mark Thoma read it so I don't have to. He claims that Marcus asserts that Krugman contradicted himself, because he asserts that the social security trust fund exists. Amazing if true. Just to check his claim, I'm going to read it after all.

The first is to deny that Social Security faces a daunting financing problem

[snip] Krugman wrote last week. "In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided."

Somebody should introduce Paul Krugman to . . . Paul Krugman.

"[A] decade from now the population served by those programs [Social Security and Medicare] will explode. . . . Because of those facts, merely balancing the federal budget would be a deeply irresponsible policy -- because that would leave us unprepared for the demographic deluge, with no alternative once it arrives except to raise taxes and slash benefits." (July 11, 2001)

"Broadly speaking, the next administration . . . will face two big economic tests. One . . . is whether it can stick to a fiscal policy, including a policy toward Social Security, that prepares this country for the demographic deluge." (Nov. 12, 2000)

OK so far Ruth Marcus has twice claimed that noting the existence of the trust fund is contradicting oneself. Krugman's current claim is that it is very possible that social security old age and disability pensions can be paid at scheduled levels forever with revenue from scheduled payroll taxes *and* the assets in the trust fund. What he claimed before was that a fiscal policy in which the unified budget deficit was zero was unsustainable. That is he was in favor of a lock box -- a commitment to balancing the general fund, that is balancing the budget not counting the social security administration surplus.

To aknowledge that in the future payments to baby boomers will be greater than payroll tax revenues was not to admit there there is a crisis, because the system was designed that way. Marcus is conveniently forgetting about trillions of dollars both those currently in the trust fund and those that will be added before the SSA begins to accept repayment of its generous loans to the general fund.

Clearly Marcus is economically illiterate or totally dishonest or most likely both.

However, that doesn't mean that Krugman hasn't changed his mind since 2001. She has 2 more quotes.

"The reason Social Security is in trouble is that the system has a large 'hole' -- basically a hidden debt -- because previous generations of retirees were paid benefits out of the contributions of younger workers . . . a multitrillion-dollar debt that somebody has to pay." (Oct. 1, 2000)

This is simple history not debatable at all except for the clause "social Security is in trouble". Not saying there is a crisis, but not what Krugman now believes exactly. The trouble is not specified. It might be that social security is in trouble because it is at the mercy of the wardens of its trust fund who are not to be trusted.

"[B]ecause the baby boomers' contributions were used to provide generous benefits to earlier generations, there isn't enough money in the system to pay the benefits promised to the boomers themselves." (June 21, 2000)

The interpretation of this depends on what you mean by "in the system". Does that mean "currently in the trust fund" or "in the trust fund plus future predicted surpluses so long as they last". I think the only interpretation consistent with ordinary English is the first. In other words, Krugman seems to have been saying that the social security administration needs not only the wealth it has but also the additional wealth that it will acquire. Therefore that additional wealth, the current and near futures surpluses, must be considered to be balanced by liabilities and not treated as free revenue for responsible current spending.

Krugman has been very consistent in arguing that the SSA old age and disability pension program is in OK shape so long as those entrusted with the trust fund are trust worthy. He does not now claim there is no problem and he never claimed there was a crisis. He has never, of course, been optimistic.

How can he be when our public policy debate is lead by lying idiots ?

Saturday, November 17, 2007

More FICA

Below I get some actual traffic for a post in which I defend Barack Obama from complaints that he is falsely claiming that social security is in crisis. I definitely agree that there is no social security crisis. I didn't discuss whether Obama claimed there was one. IIRC he didn't say anything which I consider false.

My point (if any) was that his proposed remedy is good policy. He proposes raising (eliminating ?) the cap on earnings subject to payroll taxes. I also think this is good politics. This tax increase will hit people who are considered middle class by themselves and the opinion elite. I think it will be very very pleasant to be able to debate progressivity with Republicans after getting the overall unified budget into something close to balance. Using the social security age and disability pension surplus to balance other deficits is fine by me so long as the President is named Obama. That is the case in which it really matters what Obama says now.

The alternative is to declare oneself to be totally out of touch with almost all of America as Hillary Clinton just did. She argued that people with income over the FICA cap ($97,500) aren't all particularly rich. They are the top 6% of earners according to Garance Franke-Ruta who explains.

Hillary Clinton's opposition, during last night's debate, to raising the Social Security payroll tax cap was taken to task by Iowa Independent's Doug Burns as being a pander to people in the wrong state. Clinton said of the proposed tax increase on those who earn over $97,500:

It is absolutely the case that there are people who would find that burdensome. I represent firefighters. I represent school supervisors. I'm not talking -- and, you know, it's different parts of the country. So you have to look at this across the board and the numbers are staggering.

To which [the Iowa Independent's Doug] Burns replied:

Is $97,000 a lot of money? In most of Obama's Illinois and just about all of Iowa, the answer to that is "yes," which makes Obama's position on the question of whether to raise or lift the cap on Social Security taxes more reasonable to Hawkeye State voters than the New York shape-shifting of Clinton.

[snip]
She suggested that popping the cap would hurt middle-class Americans and argued that in some parts of the nation (namely high-priced New York City which she represents) $97,500 isn't a lot of money. It would be interesting to hear her make that argument in Audubon County, Iowa, where the average home is worth half that much: $49,000.

OK this is what Democratic candidates must *not* do. Hillary Clinton said "forget about Iowa I want to talk about New York City". Also she tried to convince voters that people who personally earn over $97,500 really need the money. This will not win her the votes of people who earn *much* less than that, that is almost all voters in America.

If Hillary Clinton really thinks that an individual labor income of over $97,500 is perfectly normal, she has to hide that fact to win elections.

Look Barack Obama said he wanted to raise taxes paid by high income Americans. When polled a solid majority of Americans support his proposal (60%) but for some reason the blogging left is upset with him. What kind of left is that ?

Friday, November 16, 2007

I agree with Ed Kilgore and disagree with Paul Krugman and Duncan Black

I think it is good politics and good policy for Barack Obama to claim there is a social security crisis and propose to raise the FICA ceiling.

This is seriously alarming. I actually agree with everything Kilgore wrote, so I don't have much to add.

Krugman doesn't even get around to mentioning Obama's proposal. He argues, convincingly, that Obama's framing of the issue is not completely honest proving that not everything politicians say is the unvarnished truth. Knowck me down with a wrecking ball.

He then asserts "And on Social Security, as on many other issues, what Washington means by bipartisanship is mainly that everyone should come together to give conservatives what they want." OK Paul if you have evidence that conservatives want the FICA ceiling raised, put it on your blog, I'm all eyes.

Fortunately, I mostly agree with Kevin Drum except for the minor bit about what is to be done. For some reason, which I'm sure he has explained but I missed it, Drum is opposed to raising the ceiling.

On that question, I guess the view is that a middle class tax increase will free up funds which will be used for tax cuts for the rich (at least compared to what they would otherwise pay). To me this is a starve the beast argument that the worse things are the better they are and should appeal to those who admire both David Stockman and Vladimir Lenin.

The assumption appears to be that the Republicans will be in charge so any spare money will be given to the rich. Quite frankly, I don't see how anyone with that assumption hasn't given up on the whole opinion leading business. There is no way that progressives can obtain a decent outcome if the Republicans are in charge.

However, it is possible that they will be in opposition for a long time. The Democrats will not be allowed by filibustering Republicans, pundits and the gullible public to expand programs while there is a huge deficit (starve the government spending beast worked fine when Clinton was President).

It will be relatively easy to increase taxes paid by the super rich. Once that debate is in the open, the Republicans can't win it no matter how much money they get from rich pundits.

It is very hard to increase taxes on the middle class, yet, I think that will be necessary to fund medicare let alone universal health insurance. Calling it a Social Security crisis when it is a medicare crisis is a small price to pay for convincing people to pay what they have to pay to live in a decent society.

Paris is worth a mass and medicare is worth a fake social security crisis.

update: Welcome economist's viewers
I have more as a comment there. I will put it here too.

What "bipartisanship" means depends on which party controls the White House and the majority in congress. It always means reaching agreement and, in 1995, that clearly meant Democrats signing on to a Republican initiative. Things said by a presidential candidate are mostly important if that candidate becomes president. I think it is fairly clear that the main problem for president Obama or president Clinton will be the filibuster (it was the only thing that saved us from Bush to the very limited extent we were saved). A filibuster is definitely not bipartisan.

Obama is using the word now, because he thinks it will be useful to him if he is elected. Planning on Republicans always having the initiative makes no sense. Assuming that "bipartisanship" will continue to mean giving in to conservatives is assuming that the way Washington works can't be changed. If one assumes that, why would one bother to run for President ?

Some above thinks Krugman writes hastily. I think he writes brilliantly. My problem (if any) is that he is being honest. He wrote a column about whether there is a social security crisis, not about whether it will be useful to Democrats to pretend that there is. If Obama were as frank as Krugman, he would say that there is a medicare crisis and it can't be solved just by taxing the super rich so upper middle class people who want to be guaranteed health insurance when they are old better be willing to pay more in taxes, oh and by the way, while we're at it it will be no big deal to provide health insurance to all (which for all we know will save money in the long run as fewer people reach 65 after decades of untreated high blood pressure and diabetes (treated before age 65 but after years or decades of damaging kidneys and eyes and stuff)).

OK so you people who think Krugman writes sloppily, how about the sentence above (the one with nested parentheses (one pair inside the other)). Now *that* is writing sloppily.

Obama is a politician, Krugman is a commentator. Obama is using claims which poll well, Krugman is calling them like he sees them. Neither one is making a mistake. They are each playing different socially necessary roles brilliantly.

update II:

I agree with everything Krugman says here. In fact I agree with everything he wrote about Obama except for who is playing whom for a fool. I think Obama is outsmarting the villagers.

Thursday, November 15, 2007

I wants one too

Update: I receive an email from Allan Falk, attorney for the United States Bridge Federation: "This blogs sounds like it was written by a Ted Kaczynski or some other complete nut job. Allan Falk. Attorney at Law."

I loves me attorneys at law who writes like that.

Wow Peter Berkowitz got attention from Glenn Greenwald and Matthew Yglesias on the same day.

I am so envious I think I'll sue him.

I wish I had said that

A lot of this stuff has a "because command-and-control athletic shoe design failed so miserably in the Soviet Union we shouldn't try to stop Nike from using child labor in its factories" quality about it.

Matthew Yglesias

Update:

I wish I had said this too

one could, in principle, be both a member of the Republican Party and also be a politician whose career would benefit from participating in a serious discussion of important issues,

Matthew Yglesias

The Marshall Plan

Having devastated the Bush-Gonzales justice department, the TPMuckrakers appear to be moving on to State. Can they re-establish honest government one department at a time ? It seems unlikely, but how likely did it seem in 1945 that France and Germany would be rich democratic friends ?