Friday, July 31, 2009

From Truthers to Birthers

Polls taken during the later stages of the Bush administration indicated that over 30% of Americans, and sometimes even higher proportions of young Americans, believe that the U. S. Government either by omission (knowing about the attacks in advance but doing nothing to stop them to promote Israel, Halliburton or whatever) or commission brought about the September 11 attacks. It is hard to say with any precision how many Americans overall entertain serious doubts about whether Barack Obama is constitutionally eligible to be president; the only comprehensive survey evidence I could find in a brief search on the web involved either Internet polls or one poll funded by the crackpot websiteWorld Net Daily suggesting that the number of Americans who think president Obama's eligibility is seriously open to question is less than 10%, although that is not a small number. (This poll reported at shows that a majority of Republicans has at least some doubts about whether the president was in fact born in the U.S.)

Conspiracism has always been with us. The (liberal) historian Richard Hofstadter wrote a famous essay in the mid-1960s that eventually turned into a book, whose title, The Paranoid Style in American Politics, suggests that it can all be dismissed as irrationality. But such a theory allows us little room to make testable predictions. I think we can do better in understanding why bipartisan extremism of this sort is on the rise. In a widely-cited passage, Hofstadter actually at one point describes conspiracism as rational, in a sense:

One of the impressive things about the paranoid literature is precisely the elaborate concern with demonstration it almost invariably shows. One should not be misled by the fantastic conclusions that are so characteristic of this political style into imagining that it is not, so to speak, argued out along factual lines. The very fantastic character of its conclusion leads to heroic strivings for ‘evidence’ to prove that the unbelievable is the only thing that can be believed.

This is suggestive of a process in which the conspiracist has a very strong prior belief. Like anyone in any situation of uncertainty, upon receiving new information he must revise his belief based, as Rev. Bayes noted, on the strength of the prior belief and the strength of the new evidence. In many circumstances of the sort that are lending themselves to the new conspiracism - Dick Cheney arranged the bombing of the World Trade Center, for example -- sensible people in contrast reject the conspiratorial story out of hand. Their own prior beliefs about such an explanation are not inordinately high, because they do not enter with a very dismal belief about Dick Cheney. In conjunction with the readily available evidence that in fact the people who are publicly claiming credit for the attacks had the motivation to do it, it is only a question of the means, which after the event also become explicable. So the official story holds together.

But what if someone does in fact have a prior belief about Dick Cheney that is unusually suspicious -- even before the September 11 attacks, a belief that Mr. Cheney is in government primarily to siphon money to Halliburton, perhaps because Halliburton, as a big corporation (and an oil company to boot), is itself a sinister force. More generally, what if he believes that the American conservative movement is in fact not just wrong but evil? Then, the probative force of the evidence that can sway a person without such beliefs does not do the job for him. (The exact same argument holds for someone with high prior skepticism of the American left in general, or Barack Obama in particular.)

Now all we have to do is explain this high prior skepticism. I suspect it is the combination of several factors. First, the rising degree to which we now expect government to solve our problems, so that control of the government becomes a profoundly important question. The other side winning the next election is a dramatic threat to all of the government policies that so affect the lives of a once-free people. Conspiracism is the product of a decayed republic, where politics assumes cosmic importance because people have become so intertwined with the state and depend upon it to advance both their material interests and their belief in a just world.

And that last idea suggests another intervening factor. In his book Life, the Movie, Neil Gabler argues that popular entertainment has infiltrated every arena of American life. Not just in the sense that celebrities, movies, and so on are important to us, although that is a big part of the story, but in the sense that we consume much of life as if it were entertainment. We treat politics in particular like entertainment, although often entertainment with profound moral content. We want the good guys to win and the bad guys to lose just as if we were watching a movie or play. We take sides, and invest our side with the righteousness of truth and justice and the other side with the dark robes of evil. Elections are not abut consensual governance, but a rollicking good show. (Hence the domination of horse-race coverage in the media.) But if evil is triumphing and good is on the run, how best to explain that? Only some grand dark force can explain right routed by wrong.

The political scientist Robert Putnam wrote a highly influential book in the late 1990s called Bowling Alone: the Collapse and Revival of American Community. Among many other points, he argued that the nature of American political engagement has changed. Where once upon a time being a citizen of the Republic meant attending township meetings or becoming a precinct ward, now it primarily involves national pressure groups like the NRA or Environmental Defense Fund signing up huge numbers of members who do nothing other than send in checks to Washington, which the organizations use to hire staff, generate even more fund-raising letters, and (most importantly) making campaign donations and funding campaign commercials. The organizations have all the contact with the actual legislators, and it is the job of the citizen merely to send in the money and to watch the organizations’ polemical warriors go out and strike the evildoers a mortal rhetorical wound on Fox or MSNBC. That kind of citizenship -- the passive citizenship of watching, instead of the active citizenship of doing -- also lends itself, I suspect, to conspiracy theories as an essential element of the morality play (with "play" the operative word) that politics has become.

Finally, there is ignorance. Our students are increasingly urged to be "educated" about the broader world around them. The Chronicle of Higher Education had a recent essay (Google cache) arguing that students are more "globally aware," and that that is a good thing. But if all "globally aware" means is that people learn that there are a lot of other countries, and that America really is just another one, that is not the same thing as actual knowledge about the world. People who know that there is a country called Iran, and that their cultural values are different from ours, do not necessarily know anything about the history of Shiite Islam, nor do they necessarily know actual things about the broader world -- how China came to be such a vast country, why Madison so feared factional warfare, etc. A society that knows how to read the news but not understand it, a society where everyone is taught, especially at school, of the importance of civic engagement and directing the path of the country, but is ignorant of the historical knowledge and insights into human behavior necessary to do that with any wisdom, is a society ripe for simple explanations of complex things.


Tuesday, July 28, 2009

When Red Becomes Blue

Joel Kotkin in The American Enterprise notes that the economic rain does not appear to fall equally on the just and unjust alike:

For example, while state and local budget crises have extended to some red states, the most severe fiscal and economic basket cases largely are concentrated in places such as New York, New Jersey, Illinois, Pennsylvania, Michigan, Oregon, and, perhaps most vividly of all, California. The last three have among the highest unemployment rates in the country; all the aforementioned are deeply in debt and have been forced to impose employee cutbacks and higher taxes almost certain to blunt a strong recovery.

The East Coast–dominated media, of course, wants to claim that we have reached “the twilight” of Sunbelt growth. This observation seems a bit premature. Instead, traditional red-state strongholds such as the Dakotas, Idaho, Texas, Utah, and North Carolina, dominated the list of fastest-growing regions recently compiled for Forbes by my colleagues at

Competition among jurisdictions, just as the economist Charles Tiebout once predicted, will either fix their economic policies or they will die politically:

“When the economy comes back,” notes veteran California-based economist and forecaster Bill Watkins, “there will be a pent-up demand. People will compare and move to the places that are affordable and don’t have the fundamental tough tax and regulatory structures.”

These demographic and economic trends will have a long-term political impact. The net in-migration states—almost all of them red—will gain new representatives in Congress after the next census while New York, Pennsylvania, Michigan, and perhaps even California could see their delegations shrink.

In fact, amidst the Blue Man’s current political ascendency, the devolutionary process is likely to continue. Its roots are very deep, and will prove more difficult to reverse than media and policy claques suggest. In historic terms, blue states’ relative decline represents one of the greatest shifts of political and economic power since the Civil War.

But I wonder. It is true that states of Michigan, Ohio, and even mighty California are seeing significant out-migration to states with brighter economic prospects. (Not that there is anything new about this; when I was a child in Houston in the 1970s, the roads were full of bumper stickers that read "Will the last person out of Michigan please turn out the lights?".) Expatriate Californians have been an increasing presence in Colorado, New Mexico, Nevada, and other Western states for some time.

But there is some evidence, particularly on environmental matters, that they take their voting behavior with them. The changes are thus strengthening rather than weakening land-use planning, extreme anti-pollution and species-protection measures, and the other regulations that have proven so detrimental to housing costs and economic growth in California itself. Attitudes about labor cartels, which have long been protected in the Rust Belt states and in California, might also migrate with the migrants.

Having observed firsthand the failure of such policies in the states they are fleeing, why would people then choose to impose them on their new homes, which are succeeding precisely because of their absence? There are two possibilities. The first is cluelessness, an explanation that I am always open to. The second is that the people who are fleeing have personal stakes in imposing the same rules here as they had there. The people who can afford to move are the ones who have the biggest stake in protecting the investments they make in housing once they move to their new jurisdiction, and restricting the supply of housing is the easiest way to achieve that. More generally, people are getting the policies they want, and these policies will be coming to Texas and Wyoming soon enough.

Against this unhappy outcome is only the possibility that political competition is really meaningful, something I argued against in my previous post, and in many prior to that. The fact that incumbents are so easily reelected, that modern political technology allows the measurement of voter preferences to such a fine degree, and that politics is the product as much more of interest-group capture (i.e., competition for bribes/campaign contributions) than competition for votes combine to suggest that the faith in democracy as competition to eliminate what ails Michigan and California is misplaced. And so interest-group struggles over how to divide up ever-more opaquely raised tax revenues become the theory of the modern state with the most predictive power. Mancur Olson, in other words, in other words, is right.

James V. De Long, in another article in The American Enterprise, recognizes this problem, but predicts that the breakdown of the special-interest state leads to its replacement by something more amenable to human achievement. I am aware of no historical precedent for such a timeline, but whether Mr. De Long or Olson is right is the question on which the future of America as a dynamic, innovative society hangs.


Thursday, July 23, 2009

What Is the Real Lesson of the Cleveland Clinic?

President Obama was at the Cleveland Clinic today, and planned to say that it should be a lesson for the rest of us on how to run the health-care "system." He apparently admires, in particular, the way the clinic has decoupled medical decisions from financial incentives. In his news conference last night, he indicated he wanted to eliminate the problem where the doctor chooses a tonsillectomy instead of a cheaper alternative course of treatment because "I make a lot more money if I take this kid's tonsils out."

Leaving aside the casual way the political leader insults the integrity of a huge proportion of his constituents, presumably in the belief that it is only they who block his grand plans, the Cleveland Clinic indeed merits thought. It is a lesson alright, but not in the way the president thinks. The primary lesson of the Cleveland Clinic is rather that it is there . According to the Wikipedia entry, the clinic was founded by four physicians as a group, back when that was an unusual practice, in an attempt to provide better patient care. Since then, it has evolved into a massive facility that treats patients from all over the world. Like the Mayo Clinic, the Texas Medical Center, and other facilities, it is a crown jewel of American medicine.

And it is a product, lest we forget, of the American medical system we keep hearing such bad things about. It is an economic/medical life form of sorts, that has evolved in response to the environment, both on the cost side and the demand side, it faces. It is not something a central planner could have concocted. Indeed, the centrally planned version of the Cleveland clinic would presumably look like the big state-owned hospitals in single-payer countries, with their crowded conditions, long waiting periods, and ghastly hygiene.

When the allocation of scarce health-care resources is a matter for politics, cost containment looms extremely large. In theory, democratic competition is supposed to lead to the best health care system, in the same way that competition among restaurants leads to the best ones staying in business and the worst ones closing. In fact, political competition privileges those who speak loudly and those who lobby effectively. Given that the pressure groups seeking to stake claims to public funds are hardly confined to health care but include individuals from every arena of social activity, those claims always exceed the resources available, so that cost-cutting becomes an overpowering concern. The market system requires self-interested producers to incorporate cost into their decision-making, but also the value they are providing to patients. There is little evidence that this is true in politics. Indeed, it is more than discouraging to read about the extent to which cost control has dominated the discussion of why we need more government control over health-care decisions. In general, costs go up when more resources are claimed, and for them to come down usually requires that the service be provided. Only the arrogant politician supposes that there is some giant pot of "waste" waiting for him to discover it and fund more for less, confident, in the teeth of all the evidence, that such efficiency is the hallmark of every other type of government activity.

In a properly functioning market, the aforementioned interplay among health providers and health consumers leads, as it does in every other economic endeavor, to experimentation, and that experimentation culminates in institutions like the Cleveland Clinic. Health-care providers try, and if necessary abandon, new medicines and new surgical techniques, and more importantly they try, and if necessary abandon, new forms of social organization. They operate clinics that require payment in cash; they try group practices based on incredible degrees of specialization (the orthopedics group that has the hand specialist, the knee specialist, etc.), or they select comprehensive clinics that contain under the same roof every specialty imaginable. Those experiments that succeed stay; those that fail go. The things that don't work are purged quickly, although it is for precisely that reason that we do not observe them, and therefore cannot tally them as a success of the market system, even though they are. In a centrally planned system, in contrast, those experiments that might succeed are never born, and those that fail lobby to stay forever. This is the biggest tragedy of the looming massacre of our already wounded health system; the Cleveland Clinics of the future that we will never hear of.

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Tuesday, July 21, 2009

The Democracy Sacrament

Two stories that seem not to fit together in fact do.

The LA Times has a website that challenges the visitor to balance the CA budget, and it is surprisingly difficult. I imposed no tax hikes, and chose all spending cuts except law enforcement (a clearly legitimate government function), furloughing government workers (a cheap shot), and one-time fixes (intellectually dishonest, just kicking the can down the road one year).

I still barely managed to do it. I assume the reason for that is that federal mandates and California's mountain of referenda take a lot of spending cuts off the table. This is ultimately what democracy, unrestrained, comes to. It is so easy to vote that other people's money (including people in the future) be put in service of your interests rather than theirs. Once people discover they can do this, as the saying goes, the game is soon up. (Myron Magnet in City Journal tells of how this has played out in New York.) California's experiment in radical democracy has hit the wall.

The good news is that, contrary to some of my fears in the last few months, it seems that people are drawing a line on how much of a power grab they will tolerate at the national level. Cabinet officials and Congressmen are getting confronted all over the country (go here to see an example involving HHS Secretary Sebelius) over the ongoing attempt to end private health care before anyone has time to read the bill or find out what it costs. It seems that people were willing to tolerate the big stimulus corruption-fest, but are unwilling to add onto that another huge burden of public spending for health care. For now, anyway.

And this brings me to the other story, Honduras. The president of that land wanted, in clear violation of its constitution, a second term, and presumably one meant to last for the rest of his life. And so he tried to conduct a referendum authorizing that. But the Supreme Court told him he couldn't, the Parliament concurred, and the military was ordered to remove him. (The similarity not just to Hugo Chavez but particularly to Salvador Allende are eerie.)

But much of the world, including US officials, thinks of this as a coup against a democratically elected precedent. This is the result of the belief that elections are the source of political legitimacy, that how we choose the government, rather than what the government may do once chosen, is the only interesting question. If the people of Honduras want to vote on whether their president should have another term, the majority rules, right?

Wrong. Elections are part of a complicated package that include the separation of powers and protection of the citizens' basic rights, and no part works without the other. (The wave of radical democracy in Latin America that started with Chavez has crippled the other components of ordered liberty.) This sacramentalization of democracy, of transient majority opinion as the font of all wisdom, is unfortunate, but increasingly common. In the US the barriers are perhaps holding, but if so just barely.

Friday, July 17, 2009

The Way the Kogi Crumbles

From The Wall Street Journal (hat tip: Koreanfornian Cooking):

Kogi, a humble lunch truck, became instantly famous in Los Angeles last November when it began selling Korean tacos: grilled short ribs marinated in Korean flavorings, topped with Asian slaw, and wrapped in Mexican tortillas. Today, Kogi, has three trucks, a lounge, 36,000 Twitter followers, and lines around the block wherever they park.

Kogi had a great Internet-era, come-from-nowhere run selling something no one else had—until now, maybe. It’s not surprising that Korean-style tacos are popping up at restaurants around the country. But Baja Fresh, 283-unit casual Mexican food chain went a step further last month when it tested a version of the Korean taco at one of its restaurants and called it “the Baja Kogi taco.”

Highway robbery? No, says the corporation: “There were certainly no intentions to rip off a name or a product,” says Chuck Rink, president of Fresh Enterprises, which owns Baja Fresh.

This is an only-in-America story. It has dynamic and valuable cultural evolution. The Korean taco trucks have quickly become the hottest thing in LA, despite their humble circumstances. And it has cultural fusion: Korean insides wrapped in a Mexican outside. Not to mention that the spokesperson quoted in the article for the taco-truck company, Caroline Shin-Manguera, has a last name that bespeaks neither Latino nor Asian culture, but something altogether new. The addition of lawyers to the mix is what officially assimilates the tale into the melting pot.

The success of the Korean taco truck, and the need of a big corporation to get in on it, is a lesson in how foolish a lot of thinking about culture in the age of globalization is. Culture is never pure. It is always subject to outside influences, which are not bacterial contamination but instead experimentation, often for the better. "Protecting" some imaginary pure culture ideal form is thus equally foolish. And, contra anti-globalization hysterics, this an instance of the big corporation having to adjust its behavior because of innovation from below, and in so doing bringing a new cultural form - the Korean taco - to far more people. This is culture in a globalized world, and we are lucky to be alive to sample it.


Thursday, July 16, 2009

The Crossroads

I was interviewed by our local paper last week, along with some other economists, about how to fix our budget mess. It was one of those usual things where they try to get the left and right points of view. I regret, upon reading that the unemployment rate in Michigan is a positively Spain-like 15.2%, that what I said sort of accepted the status quo, only substantially downsized – change Medicaid from a guaranteed-pay program to an individual insurance subsidy most importantly.

I should’ve aimed higher, because the welfare state has hit the wall. I have previously argued that social-welfare expenditures are going up all over the Western world, and that they are going to crowd out most other government functions:
But the rising burden of state pensions and health care in aging populations is going to result not just in rapidly growing tax burdens, but in a sharp narrowing of the political playing field. Options for spending money that would have been eminently debatable in the flush decades of yore are simply going to be fiscally impossible because of rapidly growing entitlement spending. This spending is going to crowd out not just private-sector economic activity but opportunities for public spending of all kind.

It has happened faster than I predicted. Below is a chart from BizzyBlog, via The Belmont Club:

This is a catastrophic decline in both individual and corporate income-tax revenues. Despite this, the Congress and President have already had the big stimulus party, much of which, it turns out, is being spent propping up state budgets rather than "shovel-ready" activities, with these budgets themselves exploding first and foremost due to expenditures on health, along with state pensions and education. In other words, future taxpayers are being shanghaied into paying for our current health care. Given that the projected deficit for next year, at about 12.5% of GDP, is higher than any country for which the World Bank has data for 2005 (the highest figure for that year was the Maldives at 12.1%), we now have the economic profile of a Third World basket-case country. And this is before the Congress has gotten around to destroying the health-care system.

The welfare state generates at least two lamentable dynamics. In the first, chronicled with characteristic skill by Charles Murray, the welfare state turns our minds away from the seeking of greatness and a life well-lived, and inward toward the emptiness of consumption. No one wants to take a big risk of scientific exploration if it cuts into the vacation time, and no one wants to go to Mars if it puts the state pension fund at risk.

The second dynamic is more directly economic. In it, once the welfare state hatches, benefits go ever higher. The electorate, having a very short time horizon, cares about gimme gimme now, and when the bill comes due it’s someone else’s problem. The resultant increased tax load drives business and high achievers out of the state – factories close, young people leave, etc. This is where states like Michigan have been for some time. Then, the people left tend to be poorer and unemployed, and require more expenditures under the existing entitlements scheme. This initially prompts the legislators to rummage through the state couch hoping a few billion dollars magically fall out. They legalize slot machines, they contemplate legalizing marijuana. None of this is done on the merits; all of it is done because of the need to feed the insatiable maw of the welfare state. (I predict that legalizing prostitution and illegal immigrants will ultimately be contemplated because of the desperate need for taxes.) Eventually, in Margaret Thatcher’s pithy phrase, the socialists run out of other people’s money, leaving only collapse or dramatic reform as futures.

That crossroads appears to have arrived. I wish I had told that newspaper reporter that my state should try something radical. It should brand itself as the one state in the Union that is serious about rewarding achievement. It should pull out of Medicaid, end all government spending not devoted to providing true public goods and significant externality control, and should then (because it now can) end the individual and corporate income taxes, repeal all protectionism for labor cartels, and sharply curtail anything that makes it difficult to open or expand business. It should then watch what happens. We must now choose a road, and the one we take will make all the difference.

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