New School Politics

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George Will’s latest column in Newsweek consisted of a series of questions he would like to see Senator Obama answer during this campaign. It is worth reading the whole thing, but here are a few of my favorites:

• ExxonMobil’s 2007 profit of $40.6 billion annoys you. Do you know that its profit, relative to its revenue, was smaller than Microsoft’s and many other corporations’? And that reducing ExxonMobil’s profits will injure people who participate in mutual funds, index funds and pension funds that own 52 percent of the company?

• You say John McCain is content to “watch [Americans'] home prices decline.” So, government should prop up housing prices generally? How? Why? Were prices ideal before the bubble popped? How does a senator knowideal prices? Have you explained to young couples straining to buy their first house that declining prices are a misfortune?

• Michelle, who was born in 1964, says that most Americans’ lives have “gotten progressively worse since I was a little girl.” Since 1960, real per capita income has increased 143 percent, life expectancy has increased by seven years, infant mortality has declined 74 percent, deaths from heart disease have been halved, childhood leukemia has stopped being a death sentence, depression has become a treatable disease, air and water pollution have been drastically reduced, the number of women earning a bachelor’s degree has more than doubled, the rate of homeownership has increased 10.2 percent, the size of the average American home has doubled, the percentage of homes with air conditioning has risen from 12 to 77, the portion of Americans who own shares of stock has quintupled … Has your wife perhaps missed some pertinent developments in this country that she calls “just downright mean”?

• You favor raising the capital gains tax rate to “20 percent or 25 percent.” You say this will not “distort” economic decision making. Your tax returns on your 2007 income of $4.2 million show that you and Michelle own few stocks. Are you sure you understand how investors make decisions?

• You denounce President Bush for arrogance toward other nations. Yet you vow to use a metaphorical “hammer” to force revisions of trade agreements unless certain weaker nations adjust their labor, environmental and other domestic policies to suit you. Can you define cognitive dissonance?

Most of these questions capture economic illiteracy that is commonplace in politics. It especially suggests the arrogance of a politician who think that he can make economic decisions better than individuals can in the free marketplace. The second question really gets to the heart of it–could you even imagine him trying to answer?

Popularity: 8% [?]

An article in today’s NY Times chronicles a dental clinic operating in rural Alaska, without any certified dentists and without the sanction of the dental unions.

The dental clinic in this village on the edge of the Bering Sea looks like any other, with four chairs, a well-scrubbed floor and a waiting area filled with magazines.

But to the Alaska Dental Society and the American Dental Association, the clinic is a place where the rules of dentistry are flouted daily. The dental groups object not because of any evidence that the clinic provides substandard care, but because it is run by Aurora Johnson, who is not a dentist. After two years of training in a program unique to Alaska, Ms. Johnson performs basic dental work like drilling and filling cavities.

Some dentists who specialize in public health, noting that 100 million Americans cannot afford adequate dental care, say such training programs should be offered nationwide. But professional dental groups disagree, saying that only dentists, with four years of postcollegiate education, should do work like Ms. Johnson’s. And while such arrangements are common outside the United States, only one American dental school, in Anchorage, offers such a program.

The number of dentists in the United States has been roughly flat since 1990 and is forecast to decline over the next decade. A study last year from the Centers for Disease Control showed that Americans’ dental health was worsening for the first time since statistics began to be kept …

…[T]he A.D.A. continues to oppose allowing therapists to operate anywhere in the lower 49 states. Currently, therapists are allowed to practice only in Alaska, and only on Alaska Natives.

Unions are historically ruthless and effective in pursuit of their political interests, even when they consist of dentists. Its no surprise, of course, that dentists want a closed industry especially when non PHDed dental workers earn a third to a half as much.
The obvious effect of regulations that mandate certain standards for dental servants is to limit the supply of labor in a sector where training and education is already expensive and time consuming. The consequences are manifest in the number of dentists remaining stagnant for almost two decades as well as the fact that “100 million Americans” can’t afford coverage (100 million seems to be an absurdly high amount, but upon further research it does appear that around 150 million don’t have insurance at all, so the number may be realistic).
The case-study may also tell us something about the problems in the healthcare industry, where the American Medical Association uses its weight to limit the supply of medical workers–as well as the amount that certain non-PHDed workers are allowed to do.
A review of the book Profession and Monopoly gives examples:

“…in the United States the number, curriculum, and size of medical schools are restricted by state licensing boards controlled by representatives of state medical societies associated with the AMA. The book is also critical of the ethical rules adopted by the AMA which restrict advertisement and other types of competition between professionals, it points out that advertising and bargaining can result in expulsion from the AMA and legal revocation of licenses. The book also states that before 1912 the AMA included uniform fees for specific medical procedures in its official code of ethics. The AMA’s influence on hospital regulation was also criticized in the book.”

While I assume that some regulations may have arisen in recent years, most have been in place for years and do not explain the overall climb in healthcare prices of late. However their rollback would still be a positive step toward making healthcare a more a affordable and more competitive industry, allowing low-priced medical practices, such as the dental practice in Alaska, to do business.

What I propose is neither dangerous nor radical really–all it is is an opportunity for the price system to operate. When prices rise, demand falls, which is impetus for supply to surge and bring prices back toward equilibrium. But because supply of health service is relatively inelastic (especially because of how expensive and capital intensive it is in both the human-educational sense, and the physical-technological sense), and various policies disable lower priced service to compete, a price floor is essentially created.

Popularity: 8% [?]

From the NYT, regarding his proposals on taxes and spending:

The problem is that the campaign has been far, far more detailed about its tax cuts, which would worsen the deficit, than its spending cuts, which would reduce it. Mr. McCain has proposed the elimination of the alternative minimum tax (at a cost of $60 billion a year), new child tax deductions ($65 billion), a corporate tax cut ($100 billion) and faster write-offs for corporate investments in new equipment ($50 billion to $75 billion).

On the spending side, the senator talks broadly about cracking down on pork barrel projects and holding agencies accountable for their budgets. These steps, Mr. Holtz-Eakin told me, could eventually bring $150 billion a year in savings. He added that given Mr. McCain’s history of fighting against wasteful spending, he deserved the benefit of the doubt.

It would be easier to give him that benefit, though, if he weren’t so vague. For decades presidential candidates have been promising to cut waste, fraud and abuse, and no one has yet made a noticeable dent in the federal budget.

As Mr. McCain’s plan currently stands, The Economist magazine concluded that it “will not come anywhere close to paying for the tax cuts.” Most telling, I spoke over the past week with several other economists who admire Mr. McCain and have advised him over the years. None would defend his current fiscal package (or be quoted).

Neadless to say, there is a hole at least $150 billion wide in McCain’s economic agenda. At least, however, McCain isn’t using the old “the tax cuts will pay for themself” defense–didn’t work so well in the past eight years.

For a myriad of reasons though, I have relative confidence that McCain will attempt to control spending proportionately to the Bush and would-be McCain tax cuts. However, it will take much more than crusading against pork barreling, which accounts for about $30 billion of the budget if my memory serves me.

What it will take is addressing much, much bigger programs including the great third rails–Social Security and Medicare, whose costs are rising at an alarming rate (already SS is the biggest government program in the history of mankind). On his website he at all specific about how he will address these issues or control spending other than eliminating earmarks and freezing non-military discretionary spending.

Much of McCain’s credibility centers around the idea that he speaks his mind and does what he believes regardless of the political convenience. In this case, he is not living up to that. We have seen McCain’s specifics on tax cuts, but that’s the easy stuff. What really matter’s is how–and if–he will cut spending, but it is also not a very popular topic.

If McCain really believes what he says about spending and the size of government, he will begin thinking hard about how he will squeeze the budget. After all, if you don’t propose any cuts in spending, you shouldn’t expect the deficit to narrow any time soon.

Popularity: 18% [?]

Moments ago outlets called Pennsylvania for Hillary Clinton. This however was not much of a surprise. The real test will be at the margins. Polls had Clinton winning by around six points, but earlier today, exit polls had the race closer.

But to clue you in on what the final margin may be tonight, the following blogger takes note of how initial exit polling has consistently favored Obama by five to eight points relative to the final outcome going back to New Hampshire.

Given that, exit polls such as the following one released at 5pm indicated Clinton winning by four. If that was the average exit poll numbers, it would mean that Hillary may win by more than 10 pts. tonight.

But what really matters in the grand scheme is the delegate count, which Obama leads by around 150. Even if Clinton wins big tonight, she probably wont even be able to net 20 delegates.

When you consider that PA is a big state and that Hillary is bound to win big, and will not even dent Barack’s lead by 15%, it shows how difficult it will be for her to retake the delegate lead before the madness is over.

Popularity: 13% [?]

Recently I wrote a letter to the editor of the Greenwich Time regarding administrative regulation of student media at my high school, but especially of the student newspaper. Here’s a fraction of it:

The systematic, bureaucratic censorship of The Beak (the name of the paper), as well as all other student media at GHS, severely hamstrings the intellectual and informational quality of its product. A myriad of regulations are enforced on a whim by a single faculty adviser who has the pressure of school administration on his shoulders. Similarly, other publications, such as the satirical Weekling, and any organization wishing to disseminate information are unilaterally censored by the overbearing student activities office.

In the three years that I have written for the paper I have had three editorials censored–one on abortion, one on Islam, and one criticizing a myriad of invasive laws including bans on steroids, prostitution, marijuana, and the drinking age. In addition, I have witnessed a list of columns not published because of the whimsical regulations on what is “appropriate” for young adults.

The case I am trying to make is not one a moralistic, first amendment one. To the contrary, I do not think that the first amendment holds much weight in this situation. Thus, I am not disputing the Supreme Court decision from Hazelwood School District v. Kuhlmeier, which essentially says that because the school is essentially the property of the government, the school administration has the right to regulate student speech to their liking.

However, whether the school can and whether the school should regulate speech are two different issues. Call me a romantic, but I thought that the goal of a school was to maximize the body of knowledge and curiosity of students (although I think that makes me more rational than romantic). I do not see how schools could at once be promoting an intellectual environment when they are systematically stifling various issues and opinions.

Take the issue of teen pregnancy, for instance, which was the disputed topic in the Hazelwood case. Few would dispute that it is a touchy subject. But what audience better to address it with than teens? The article in question contained primary sources discussing the reality of the issue. I don’t see how talking about the matter in an open and honest manner could hurt students. To the contrary, I can only imagine that talking about it would inform students and prevent pregnancy for those who are informed by the newspaper article.

Similarly, one of my censored columns was a critical examination of certain aspects of Islam. While conventional wisdom tells us not to discuss religion in public, not discussing religion freely and in a philosophical manner does nothing to reduce “intolerance” (which is what my editorial was labeled). The more informed and rational people are and the more they understand that it is okay to disagree even on matters as fundamental as religion, the more rounded and tolerant our educational institutions will be.

The saddest part about the censorship, which I should also mention is not practiced nearly as much as it is practiced in colleges, is that it muffles the creativity of students. While schools should be attempting to teach their kids as much about the world as possible, they only have so much time. The greatest reflection on educators is when they can foster the creativity and passion of individual students. Such initiative is manifest in students who examine fringe and risque issues in a scholarly manner. And while these cases are rare, the last thing that should be done by in response is censor them.

Popularity: 21% [?]

Not unexpectedly, there has been a sufficient amount of crowing from the left about the need for more financial regulation in light of the credit crunch. Their reasoning seems to encompass little more than the idea that deregulation or underregulation was the source of our current problems (which makes even less sense when you consider that there is no significant repeal in mortgage or lending laws to my knowlege).

This essay, however, directly refutes that idea:

The most striking fact about the ongoing financial mayhem is that it is concentrated not in lightly regulated hedge funds but in more heavily regulated commercial and investment banks. It is banks that created subprime mortgage securities. It is banks that mispriced them. And it is banks that filled their own coffers with this toxic paper, losing hundreds of billions of dollars. A somewhat breathless March 31Financial Times article proclaimed the closing of the worst month for hedge funds since the collapse of the infamous Long Term Capital Management in 1998. But the average fund tracked by the Chicago-based firm Hedge Fund Research declined by a mere 2.4 percent in March, bringing the cumulative fall for the first quarter of 2008 to 2.7 percent. By contrast, the bank-heavy financial services component of the S&P 500 fell 12.3 percent in the first quarter.

Hedge funds, for the most part, have weathered the storm remarkably well.

Simply put, if underregulation was the problem we would logically see worse performance from hedge funds than investment banks seeing that hedge funds are relatively unregulated financial vehicles.

While I blame the present problem on years of overly exuberant credit expansion by the Fed, I think it is an economic mystery why loose credit disproportionately funded a bubble in the mortgage market versus any other area of the economy (in the same way that it is mysterious why technology was overextended in the late ’90s). Put simply, we do not know why the mortgage markets bore the brunt of the Fed’s policy, but hopefully we can at least be resolved to do two things: a) not let the central banks devalue our money to the extent they have been doing this decade and b) avoid government bail-outs participants in these financial markets, which will create the same incentives to make bad investments that cause the problem in the first place.

Popularity: 25% [?]

The great actor Charlton Heston died this weekend at the age of 84. Why he was rightfully best known for his prolific career as an actor, including his heroic rolls in The Ten Commandments, Planet of the Apes, and Ben-Hurr, there is also something to be said about his political activism which went strongly against the Hollywood grain. For five years he served as the president of the NRA, and the video linked shows his most famous moment in that capacity as he responded to efforts by the Clinton administration to curtail gun-ownership rights.

Popularity: 21% [?]

The notable economist Greg Mankiw had a very sensible article in the Economic View column of the New York Times regarding Nafta, trade, and this campaign. Its main contentions include:

1. That economists are far more fond of free trade than the general public. For instance:

A 2006 poll of Ph.D. members of the American Economic Association found that 87.5 percent agreed that “the U.S. should eliminate remaining tariffs and other barriers to trade.”

On the other hand, a minority of the general public (around one in four according to many polls including one mentioned in the article) think that free trade is beneficial to the economy.

2. John McCain has been a constant champion of free trade throughout his career and is the only of the three candidates who will stand strong for the concept as president.

3. The issue of trade has become mired by populism recently and divorced from economics which could lead us towards more protectionist policies.

Its a good article which reaffirms one of the themes that I have been focusing on especially during this campaign: how populism and economic illiteracy is driving protectionist rhetoric and proposals from politicians not entirely limited to the left (will Mike Huckabee please stand up).

Popularity: 33% [?]

In the 1984 Democratic presidential primary the once heavily favored former Vice President Walter Mondale and young, post-partisan upstart Senator Gary Hart were running neck and neck by March. Hart, who was running on the slogan of “new ideas,” had momentum up until a debate in which he was expounding on that phrase. In a rebuttal, Mondale quipped, “When I hear your new ideas, I’m reminded of that ad, ‘Where’s the beef?’” That sound bite was the nail in Hart’s coffin. With New-Deal Dems as his foundation, the former Veep went on to capture the nomination only to be defeated by Ronald Reagan in an electoral landslide.

Twenty-four years later to the month the Democratic presidential primary is similarly juxtaposed. Senator Barack Obama, who has only a third the experience in the Senate that Gary Hart did in 1984, actually has a slight lead in the delegate race, a lead that almost no one would have predicted two months ago. And while Senator Hillary Clinton has essentially been asking for the beef for more than a year now, it appears that this campaign’s “where’s the beef?” moment will never come.

But what is so great about Barack Obama that has prevented him from meeting Gary Hart’s fate? How in the world could this man, who was in the Illinois state legislature just three years ago and would have trouble answering “where’s the tofu?”, overtake the juggernaut that is the Clinton political machine?

The answer is essentially found in the nature of both Hart and Obama’s campaign.

Both senators were underdogs. Both were going up against a candidate with more experience, more institutional support, and more policy expertise and issue familiarity. Both harnessed the power of rhetoric and idealism that reigns supreme among many Democrats. Both appealed to the wealthier, more educated, more liberal, less partisan, less politically needy Democrats, dubbed in this election as “latte liberals.” Winning these voters is almost like a popularity contest, the winner is the one with the blank slate, the non-partisan image, the high-falutin rhetoric, and the cool-kid reputation.

The simple reason that Obama is actually winning this race, while Hart met his demise, is that Obama is more of those things to more people than Hart could ever be. Hart was a popular politician. Obama, on the other hand, has become a phenomenon. The media adores him, celebrities glorify him, and the young and idealistic revere him. A new cult of personality has rallied around Barack Obama, casting him as the savior of a nation without ever auditing him for substance. The sad irony for Hillary Clinton is that she can’t get rid of the guy with the funny name for no other reason than he’s as slick, if not slicker, than the only other politician who has ever been able to overshadow her.

But while “Slick Willy” won two terms by building a coalition, Obama is making headway by rallying the political equivalent of idol worshipers. Rather than center the campaign around a platform, accomplishments, or a track record of any kind, the Senator’s candidacy has been built around his image as a post-partisan messiah–the second coming of Jack Kennedy, perhaps. Serious voters should have ceased to take Obama very seriously when Oprah started going around telling people that Obama “is The One.” They should have been similarly squeamish when they saw a music video called “Yes, We Can!” created independently by about a dozen celebrities consisting of them singing along to an Obama victory speech.

The concept was creepy in the first place, but the fact that the video was created without the sanction of the Obama campaign should also raise alarm. Powerful politicians are supposed to have their own heroic self-image, but when others start buying into that same self-regard it ceases to be cute and becomes just frightening. In the same way it was frightening when at a rally in Texas “The One” interrupted his stump speech to blow his nose and the 17,000 in attendance responded with resounding cheers.

I had the opportunity to witness the phenomenon first hand when I attended an Obama rally in Hartford last month. During his speech, he stopped to toss water and call medical attention to a woman who had fainted in the front of the crowd. I didn’t think much of it at the time, but not too long thereafter, while watching the news, I discovered that the episode was not at all random. In fact, the woman in Connecticut was the sixth to be documented fainting at an Obama stump speech this election season. The severity of the trend has led the Obama campaign to ensure medical teams remain in close proximity to the crowd at all times. It raises the question, how much credibility should a candidacy have when its events feel more like a rock concert than a political rally and it’s fanatics behave more like teenage girls at an NSYNC concert than partisans?

The media hasn’t carried itself much better. In a recent study, the non-partisan Center for Media and Public Affairs found that the Senator has received the most favorable coverage of any candidate by a country mile. The study, which evaluated about 800 election stories by the major TV news outlets in December and January, counted 84% of stories about Obama as favorable. Meanwhile, the ever-oppressed Hillary Clinton received the least favorable coverage, with only 51% positive. This shouldn’t come as much of a surprise, for anyone who opens a newspaper, news magazine, or watches a news channel semi-regularly. At least for me, watching the likes of Chris Matthews, Keith Olberman, and Wolf Blitzer futilely try to hide their man-crushes becomes unbearable at times.

The media’s fetish reached an apex of sorts in the last debate between the Democrats, hosted by the Obama sycophants at NBC. At one point, Tim Russert essentially asked Clinton a pop-quiz question, testing her familiarity of the political situation in Russia. Then the question shifted to Obama, but at that point the hard part had already been answered for him. Not only was it emblematic of the media’s general bias, but it was also a missed opportunity for them to really test Obama’s issue knowledge. Those paying attention are well aware that Clinton knows all the intricacies of policy and details of geopolitical situations better than anyone. Obama on the other hand, who has not been in a serious elected position for four years even, needs to be vetted.

For all the empty jabbering about change, there has not been a lot of talk about what Obama’s concept of change actually means. The whole notion that Obama is so fabulous because he’s offering change is fundamentally nonsensical. What’s so special about a presidential candidate offering change? Is not the point of almost every campaign–incumbents aside–that they will offer something unique to the presidency?

To the extent of my knowledge, there has never been a candidate who ran on the slogan “A status quo we can believe in.” Moreover, it is not even as if the “change” that Obama is offering is unique in 2008. There is almost no part of his platform that is exceptional when juxtaposed with the other Democrats who ran for the nomination. His domestic agenda is so hard to distinguish from Senator Clinton’s, for instance, that the Clinton campaign has even accused Obama of copying her economic plan.

Allegations of plagiarism aside, there remain absolutely no new political ideas coming from Senator Obama’s head. For those who have actually looked over his policy positions–which I surmise does not include many of his supporters–they will have little trouble deciphering that Obama is little more than a populist proposing a greater government tyranny over the market place. Despite talk of the “audacity of hope,” his campaign has been based on an extraordinary amount of fear: fear of free trade, fear of “predatory lending,” fear of global warming, fear of the price system and a free market in things like healthcare, the list goes on.

People have become so entranced by Obama’s rhetoric that they are failing to recognize the realities of his candidacy. Behind the deep, facund voice, Barack Obama is little more than a Gary Hart with a third the experience. While I realize it may be the political equivalent of little kids discovering there is no Santa Claus, young voters need be told there is nothing substantively special about the glorified Democrat with the funny name. When push comes to shove, an Obama presidency will mean more government, more spending, more regulation, and less freedom. The scary part is that Obama can sell even a useless, tarnished agenda like that one to voters. If he really offered hope and change, he would put his silver tongue to use by advocating market reforms and the roll back of massive government programs that are on track to bankrupting us in the near future. But the fact is he’s not doing that. As such, Americans will need a significant reality check, and quickly, because by November, it will be too late.

Popularity: 52% [?]

With David Patterson being sworn in today as the first blind and black governor of New York, I thought I would back track and drop my two cents on the sex scandal that is responsible for his assumption of the office.

I am typically a believer that personal issues should remain just that even for politicians, and they should be judged on their political ideology and leadership even if they are a bit scummy. In Elliot Spitzer’s case however, the hypocrisy may have been just too stark to ignore. As governor, for instance, he signed a bill upping the penalty for patrons of prostitution, making it possible for johns to go to jail for up to a year.

The hypocrisy shouldn’t come as to much of a surprise for a politician as arrogant as Spitzer. It was not just prostitution where he sought to intrude on people’s private lives and dealings: it included was music advertisers, banks lending to the less wealthy, and individual companies like AIG as well. And yet, he thought he was above the laws that he created and enforced.

But while Spitzer’s sexual escapade was individually scummy, there was nothing fundamentally sinful about it the social sense. Spitzer and the prostitute’s actions did not harm anybody, they did not coerce anyone, nor violate anybody’s rights. The arrangements of their relationship were voluntary and mutual. Of course my reasoning brings into question the illegality of prostitution, but it deserves such examination despite popular opinion being for the ban.

I find the legal status of prostitution strange because while sex is legal when its free, it isn’t when it costs money. I can think of no other good or service on the market whose exchange is legal when it’s free, but illegal when there is a monetary fee attached. Moreover, prostitution could be made substantially more safe if it were legalized. By bringing the industry out into the light, there would be better checks on infected prostitutes and STDs.

Next, much of the defense of anti-prostitution laws I’ve been hearing in the past week’s relates to the exploitation of women. This invites a two-pronged response: first, it does not constitute exploitation when women chose to venture into the industry themselves–as is mostly the case. Second, when a prostitute is indeed exploited–coerced, harmed, etc.–who is she going to go to for help? The police? Not as long as prostitution is illegal. Because prostitution is illegal, all the “exploitation” remains in the dark, and the woman exploited remain unprotected. If the practice was legal however, these woman would have the same protection anyone else does, and thus would be substantially safer.

If people really wanted to demote exploitation of women, they would make prostitution legal, as a means of granting women who chose to engage in it equal protection under the law.

And that’s that single most important issue at hand amidst the ado about Elliot Spitzer.

Here is a column elaborating on the things I am talking about from the opinion pages of the Chicago Tribune.

Popularity: 31% [?]