Tim Harford Exposes Screwy Reasoning

Here is an excellent post by the economist Tim Harford. It takes to task the ridiculous right with their simplistic "arguments" about the public sector being parasites on the private sector:

“We will set public sector pay awards at an average of 1 per cent for each of the two years after the pay freeze ends . . . while I accept that a 1 per cent average rise is tough, it is also fair to those who work to pay the taxes that will fund it.”

... the chancellor’s autumn statement

“Did you hear about that 1 per cent pay rise?”

“I did. Tough but fair, if you ask me.”

“Why’s that?”

“Well, we in the private sector have to work to pay for you in the public sector. It’s only fair that you show some restraint.”

“Well, ‘show some restraint’ is not quite the phrase, is it? It’s not as if I’m choosing my own pay. You must be confusing me with the chief executive of a major PLC. No need for me to show any restraint; George Osborne is quite capable of showing restraint on my behalf, thank you very much.”

“Good job he is, too. I’m paying for your salary.”

“Is this the ‘hard-working private sector funds the bloated public sector’ line?”

“Funny you should mention that, I guess it is.”

“I’ve never understood that. I’ll admit that you pay for my salary, but I pay for your salary too.”

“How’s that?”

“You work in sales for a mobile phone company. I work as a teacher.”

“Yes, my taxes pay for your salary.”

“But my mobile phone bill pays for your salary. If the government nationalised Vodafone – stranger things have happened – and privatised the school system, my taxes would be paying for your salary while my employer would be sending you a bill for my teaching of your children. But we’d still be paying each other. This is a modern economy. Everybody pays for everybody else’s salary, except the subsistence farmers and survivalists, who look after themselves.”

“But…”

“Look, communism didn’t collapse because there wasn’t any private sector to pay for the public sector. It collapsed because the incentives were thoroughly screwed up. There’s no logical reason why an economy couldn’t be 100 per cent public sector. You’re making it sound like that’s impossible as a matter of simple arithmetic.”

“Still, communism is hardly an advertisement for the public sector, is it? The private sector creates wealth.”

“No, individual technologists, managers, scientists and entrepreneurs create wealth. Their natural home might well be the private sector but there’s no logical reason why they can’t be employed in the public sector. Tim Berners-Lee invented the World Wide Web while he was working in the public sector.”

“He’s not exactly representative of the public sector.”

“Sure, but Steve Jobs isn’t exactly representative of the private sector either. There are remarkable individuals who do remarkable things, and I’m happy to acknowledge that the private sector is usually the place where those remarkable things have space to grow. But the private sector as a whole is doing something more pedestrian: it’s providing goods and services. And so is the public sector. To suggest that some of these goods and services count as ‘creating wealth’ and others don’t, purely because some are paid for out of taxes and others are paid for in the marketplace, doesn’t make any sense.”

“Still, Osborne was right: we need to make savings. Public sector workers have to do their bit.”

“That’s a fallacious line of reasoning: it assumes that the public sector workers of yesterday are going to be the same people as the public sector workers of tomorrow, after several years of chipping away at their real incomes. They might not be. I might decide to become a mobile phone salesman instead of an economics teacher.”

“The way this conversation is going I wish you’d made that choice a while ago.”

“The question is where you want the best people. Trimming public sector wages might harm current public sector workers, or it might just persuade them to seek new pastures, to be replaced by over-promoted junior staff – or mobile phone salesmen who were sacked because of a sudden influx of better-qualified people who could do their job. It may well be reasonable for Osborne to squeeze public sector pay, but if he does, private sector workers will suffer consequences too. Sometimes when he says that we’re all in this together, he’s right – if only by accident.”

It is always easy to blame "the other fellow" for our problems. But with some hard reasoning we realize that public & private sector employees are all in the same pot. Their salaries are set by others. All contribute to a better society if they work hard at their jobs. To attack one is to attack all. This is a "divide and rule" strategy of the political right.

Hoisting the Republicans on their Own Petard

Here is an excellent post by Robert Reich on his blog. I love the way he carefully lays out the logic so that when you arrive at the last sentence you realize that he has cornered the Republicans by their own screwy logic:

Every time I try to make sense of Republican tax doctrine I get lost.

For example, rank-and-file House Republicans are willing to increase taxes on the middle class starting in a few weeks in order to avoid a tax increase the very rich.

Here are the details: The payroll tax will increase 2 percent starting January 1 – costing most working Americans about $1,000 next year – unless the employee part of the tax cut is extended for another year.

Democrats want to pay for this with a temporary – not permanent – surtax on any earnings over $1 million, according to their most recent proposal. The surtax would be 3.25 percent.

This means someone who earns $1,000,001 would pay 3 and a quarter cents extra next year.

Relatively few Americans earn more than a million dollars, to begin with. An exquisitely tiny number earn so much that a 3.25 percent surtax on their earnings in excess of a million would amount to much. Most of these people are on Wall Street. It’s hard to find a small business “job creator” among them.

Nonetheless, Republicans say no to the surtax.

This puts Republicans in the awkward position of allowing taxes to increase on most Americans in order to avoid a small, temporary tax only on earnings in excess of a million dollars — mostly hitting a tiny group of financiers.

Not even a resolute, doctrinaire follower of GOP president Grover Norquist has any basis for preferring millionaires over the rest of us.

To say the least, this position is also difficult to explain to average Americans flattened by an economy that’s taken away their jobs, wages, and homes but continues to confer record profits to corporations and unprecedented pay to CEOs and Wall Street’s top executives.

So Republican leaders are trying to get rank-and-file Republicans to go along with an extended payroll tax holiday — but by paying for it without raising taxes on the very rich.

According to their latest proposal, they want to pay for it mainly by extending the pay freeze on federal workers for another four years — in effect, cutting federal employees’ pay even more deeply — and increasing Medicare premiums on wealthy beneficiaries over time.

But even this proposal seems odd, given what Republicans say they believe about taxes.

For years, Republicans have been telling us tax cuts pay for themselves by promoting growth. That was their argument in favor of the Bush tax cuts, remember?

So if they believe what they say, why should they worry about paying for a one-year extension of the payroll tax holiday? Surely it will pay for itself.

That last bit should make Republicans squirm. But it won't. They are shameless hypocrites and liars. Being caught in their big lie causes them no shame.

Krugman on the Republican Presidential Candidates

Here is a bit from an excellent NY Times op-ed by Paul Krugman that nails the deep flaws in the Republican campaign for the White House:

There are two crucial things you need to understand about the current state of American politics. First, given the still dire economic situation, 2012 should be a year of Republican triumph. Second, the G.O.P. may nonetheless snatch defeat from the jaws of victory — because Herman Cain was not an accident.

Think about what it takes to be a viable Republican candidate today. You have to denounce Big Government and high taxes without alienating the older voters who were the key to G.O.P. victories last year — and who, even as they declare their hatred of government, will balk at any hint of cuts to Social Security and Medicare (death panels!).

And you also have to denounce President Obama, who enacted a Republican-designed health reform and killed Osama bin Laden, as a radical socialist who is undermining American security.

So what kind of politician can meet these basic G.O.P. requirements? There are only two ways to make the cut: to be totally cynical or to be totally clueless.

Mitt Romney embodies the first option. He’s not a stupid man; he knows perfectly well, to take a not incidental example, that the Obama health reform is identical in all important respects to the reform he himself introduced in Massachusetts — but that doesn’t stop him from denouncing the Obama plan as a vast government takeover that is nothing like what he did. He presumably knows how to read a budget, which means that he must know that defense spending has continued to rise under the current administration, but this doesn’t stop him from pledging to reverse Mr. Obama’s “massive defense cuts.”

Mr. Romney’s strategy, in short, is to pretend that he shares the ignorance and misconceptions of the Republican base. He isn’t a stupid man — but he seems to play one on TV.

Unfortunately from his point of view, however, his acting skills leave something to be desired, and his insincerity shines through. So the base still hungers for someone who really, truly believes what every candidate for the party’s nomination must pretend to believe. Yet as I said, the only way to actually believe the modern G.O.P. catechism is to be completely clueless.

And that’s why the Republican primary has taken the form it has, in which a candidate nobody likes and nobody trusts has faced a series of clueless challengers, each of whom has briefly soared before imploding under the pressure of his or her own cluelessness. Think in particular of Rick Perry, a conservative true believer who seemingly had everything it took to clinch the nomination — until he opened his mouth.

It is tragic that America has sunk to the depths of idiocy that it has in its politics. Buffoons run the show. Fanatics and crazies manage the "politics". Insane.

The Psychology of Successful Begging

Here is a quick lesson from a psychology prof, Dan Ariely, about the techniques for successful begging:

One day a few years ago I passed a street teeming with panhandlers, begging for change. And it made me wonder what causes people to stop for beggars and what causes them to walk on by. So I hung out for a while, engaging in a bit of discreet peoplewatching. Many people passed the beggars without giving anything, but there were a few who stopped. What was it that separated those who paused and gave money from those who didn’t? And what separated the more successful beggars from those who were less successful? Was it something specific about their situation, or their presentation? Was it the beggar’s strategy?

To look into this question, I called on Daniel Berger Jones, an acting student at Boston University who had just finished hiking around Europe. Not having shaved in months and already looking pretty scruffy, he was ready for the job (plus as part of his training to be an actor I figured it would be good for him to learn how to beg for money – at the time he did not see that particular benefit). So I found a street corner and placed him there to take on the panhandling trade. I asked Daniel to try a few different approaches to begging and to keep track of the approaches that made him more or less money. (Of course, after the experiment was over we donated all the money that he made to charity). The general setup was what we call a 2×2 design: When people walked by, Daniel would either be sitting down (the passive approach) or standing up (the active approach) and he would either look them in the eyes or not. So there were times when he was 1) sitting down and looking people in the eyes, 2) sitting down and not looking people in the eyes, 3) standing up and looking people in the eyes, or 4) standing up and not looking people in the eyes.

Daniel got to work, scrounging for money. He stayed on his corner for a while, trying the different approaches. And it turned out that both his position and his eye contact did, in fact, make a difference. He made more money when he was standing and when he looked people in the eyes. It seemed that the most lucrative strategy was to put in more effort, to get people to notice him, and to look them in the eyes so that they could not pretend to not see him.

Interestingly, while the eye contact approach was working in general, it was clear that some of the passersby had a counterstrategy: they were actively shifting their gaze in what seemed to be an attempt to pretend that he wasn’t there. They simply acted as if there was a dark hole in front of them rather than a person, and they were quite successful at averting their gaze.

At some point, something very interesting happened. There was another beggar on the street – a professional beggar – who approached young Daniel and said, “Look kid, you don’t know what you’re doing. Let me teach you.” And so he did. This beggar took our concept of effort and human contact to the next level, walking right up to people and offering his hand up for them to shake. With this dramatic gesture, people had a very hard time refusing him or pretending that they did not seen him. Apparently, the social forces of a handshake are simply too strong and too deeply engrained to resist – and many people gave in and shook his hand. Of course, once they shook his hand, they would also look him in the eyes; the beggar succeeded at breaking the social barrier and was able to get many people to give him money. Once he became a real flesh and blood person with eyes, a smile and needs, people gave in and opened their wallets. When the beggar left his new pupil, he felt so sorry for poor Daniel –and his panhandling ineptitude– that he actually gave him some money. Of course Daniel tried to refuse, but the beggar insisted.

I think there are two main lessons here. The first is to realize how much of our lives are structured by social norms. We do what we think is right, and if someone gives us a hand, there’s a good chance we will shake it, make eye contact, and act very differently than we would otherwise.

The second lesson is to confront the tendency to avert our eyes when we know that someone is in need. We realize that if we face the problem, we’ll feel compelled to do something about it, and so we avoid looking and thereby avoid the temptation to give in and help. We know that if we stop for a beggar on the street, we will have a very hard time refusing his plea for help, so we try hard to ignore the hardship in front of us: we want to see, hear, and speak no evil. And if we can pretend that it isn’t there, we can trick ourselves into believing –at least for that moment– that it doesn’t exist. The good news is that, while it is difficult to stop ignoring the sad things, if we actively chose to pay attention there is a good chance that we will take an action and help a person in need.

After reading this and thinking about it, I've decided to take responsibility for my actions. I now plan to actively greet beggars, wish them a good day, but not give in to the urge to hand over money. I don't like being manipulated. Private charity is effectively a strategy for "hiring beggars" to populate the streets.

I prefer a rational system where the government assures a basic level of income security. Otherwise, the crafty beggars can use "technique" to get the money leaving the inept to quietly starve. That bugs me. Life is unfair, and it doesn't help if the needy become manipulative so that that the more brazen beggars "succeed" at the expense of the inept beggars. I want justice and fairness in my charity. This calls for a rational system of spotting need and ensuring a basic level of comfort and care to the needy.

There are studies that show that Republicans give more to charity than Democrats. But I think the Republicans are hypocrites. They give to co-religionists. A lot of those gala "charity balls" count as charity when in fact they are really a social event with a ticket price that hives off money to a "charity" such as helping the needy opera in town or the down-and-out art centre where the needy gather to get a little "culture".

I think the Democrats are more like me: they want charity run rationally by the government so that the cheats and frauds don't get it all.

Dowd Nails Newt Gingrich

Here is a bit from a NY Times opinion piece by Maureen Dowd:

Newt Gingrich’s mind is in love with itself.

It has persuaded itself that it is brilliant when it is merely promiscuous. This is not a serious mind. Gingrich is not, to put it mildly, a systematic thinker.

His mind is a jumble, an amateurish mess lacking impulse control. He plays air guitar with ideas, producing air ideas. He ejaculates concepts, notions and theories that are as inconsistent as his behavior.

He didn’t get whiplash being a serial adulterer while impeaching another serial adulterer, a lobbyist for Freddie Mac while attacking Freddie Mac, a self-professed fiscal conservative with a whopping Tiffany’s credit line, and an anti-Communist Army brat who supported the Vietnam War but dodged it.

...

He warned against political pressures encouraging “Black xenophobia.” What’s xenophobic about Africans wanting their oppressors to go away? It’s like saying abused wives who want their husbands to leave are anti-men.

...

Newt is like the Great White Hunter out on campaign safari, trying to bag a Mitt, an animal with ever-changing stripes. Certainly, the 68-year-old’s haughty suggestions on child labor last week in Iowa smacked of harsh paternalism and exploitation.

He expanded on Dickensian remarks he’d made recently at Harvard, where he said “it is tragic what we do in the poorest neighborhoods, entrapping children in child laws which are truly stupid,” adding that 9-year-olds could work as school janitors.

“Really poor children in really poor neighborhoods have no habits of working and have nobody around them who works,” he asserted in an ignorant barrage of stereotypes in Des Moines. “So they literally have no habit of showing up on Monday.”

Has he not heard of the working poor? The problem isn’t that these kids aren’t working; it’s that they don’t have time with their parents, who often toil day and night, at more than one job, and earn next to nothing.

Newt’s the kind of person whom child labor laws were created to curb. He sounds like a benign despot with a colonial subtext: Until I bring you the benefits of civilization, we will regard you as savages.

He’s Belgium. The poor are Congo.

The joke is that Newt passes for an "intellectual" in the Republican party. Tragic.

A Regressive Vision for America

Robert Reich has spelled out the "compelling" vision that the Republicans have for America in a post on his blog. Here is the key bit:

What kind of society, exactly, do modern Republicans want? I’ve been listening to Republican candidates in an effort to discern an overall philosophy, a broadly-shared vision, an ideal picture of America.

They say they want a smaller government but that can’t be it. Most seek a larger national defense and more muscular homeland security. Almost all want to widen the government’s powers of search and surveillance inside the United States – eradicating possible terrorists, expunging undocumented immigrants, “securing” the nation’s borders. They want stiffer criminal sentences, including broader application of the death penalty. Many also want government to intrude on the most intimate aspects of private life.

They call themselves conservatives but that’s not it, either. They don’t want to conserve what we now have. They’d rather take the country backwards – before the 1960s and 1970s, and the Environmental Protection Act, Medicare, and Medicaid; before the New Deal, and its provision for Social Security, unemployment insurance, the forty-hour workweek, laws against child labor, and official recognition of trade unions; even before the Progressive Era, and the first national income tax, antitrust laws, and Federal Reserve.

They’re not conservatives. They’re regressives. And the America they seek is the one we had in the Gilded Age of the late nineteenth century.

It was an era when the nation was mesmerized by the doctrine of free enterprise, but few Americans actually enjoyed much freedom. Robber barons like the financier Jay Gould, the railroad magnate Cornelius Vanderbilt, and the oil tycoon John D. Rockefeller, controlled much of American industry; the gap between rich and poor had turned into a chasm; urban slums festered; children worked long hours in factories; women couldn’t vote and black Americans were subject to Jim Crow; and the lackeys of rich literally deposited sacks of money on desks of pliant legislators.

Most tellingly, it was a time when the ideas of William Graham Sumner, a professor of political and social science at Yale, dominated American social thought. Sumner brought Charles Darwin to America and twisted him into a theory to fit the times.

Few Americans living today have read any of Sumner’s writings but they had an electrifying effect on America during the last three decades of the 19th century.

To Sumner and his followers, life was a competitive struggle in which only the fittest could survive – and through this struggle societies became stronger over time. A correlate of this principle was that government should do little or nothing to help those in need because that would interfere with natural selection.

Listen to today’s Republican debates and you hear a continuous regurgitation of Sumner. “Civilization has a simple choice,” Sumner wrote in the 1880s. It’s either “liberty, inequality, survival of the fittest,” or “not-liberty, equality, survival of the unfittest. The former carries society forward and favors all its best members; the latter carries society downwards and favors all its worst members.”

Sound familiar?

Newt Gingrich not only echoes Sumner’s thoughts but mimics Sumner’s reputed arrogance. Gingrich says we must reward “entrepreneurs” (by which he means anyone who has made a pile of money) and warns us not to “coddle” people in need. He calls laws against child labor “truly stupid,” and says poor kids should serve as janitors in their schools. He opposes extending unemployment insurance because, he says, ”I’m opposed to giving people money for doing nothing.”

Sumner, likewise, warned against handouts to people he termed “negligent, shiftless, inefficient, silly, and imprudent.”

Just like the McCarthy Era was a big step into the past and the Nixon "secret peace plan" for Vietnam was a step back, the Republicans have yet again come up with a right wing political vision for America that is indistinguishable from a nightmare.

American Right Wing Politics

Here is a nice summary of the Republican "offerings" for a presidential candidate. This is from Maureen Dowd's op-ed in the NY Times:

Mitt Romney is a phony with gobs of hair gel. Newt Gingrich is a phony with gobs of historical grandiosity.

The 68-year-old has compared himself to Charles de Gaulle. He has noted nonchalantly: “People like me are what stand between us and Auschwitz.” As speaker, he liked to tell reporters he was a World Historical Transformational Figure.

What does it say about the cuckoo G.O.P. primary that Gingrich is the hot new thing? Still, his moment is now. And therein lies the rub.

As one commentator astutely noted, Gingrich is a historian and a futurist who can’t seem to handle the present. He has more exploding cigars in his pocket than the president with whom he had the volatile bromance: Bill Clinton.

But next to Romney, Gingrich seems authentic. Next to Herman Cain, Gingrich seems faithful. Next to Jon Huntsman, Gingrich seems conservative. Next to Michele Bachmann and Rick Perry, Gingrich actually does look like an intellectual. Unlike the governor of Texas, he surely knows the voting age. To paraphrase Raymond Chandler, if brains were elastic, Perry wouldn’t have enough to make suspenders for a parakeet.

...

Romney is a mundane opportunist who reverses himself on core issues. Gingrich is a megalomaniacal opportunist who brazenly indulges in the same sins that he rails about to tear down political rivals.

Republicans have a far greater talent for hypocrisy than easily cowed Democrats do — and no doubt appreciate that in a leader.

Gingrich led the putsch against Democratic Speaker Jim Wright in 1988, bludgeoning him for an ethically sketchy book deal. The following year, as he moved into the House Republican leadership, he himself got in trouble for an ethically sketchy book deal.

Gingrich was part of the House Republican mob trying to impeach Bill Clinton for hiding his affair with a young government staffer, even as Newt himself was hiding his affair with a young government staffer.

Gingrich has excoriated Freddie Mac and Fannie Mae for dragging the country into a financial spiral and now demands that Freddie Mac be broken up. But it turns out that he was on contract with Freddie for six years and paid $1.6 million to $1.8 million (yacht trips and Tiffany’s bling for everyone!) to help the company strategize about how to soften up critical conservatives and stay alive.

At a Republican debate in New Hampshire last month before this lucrative deal became public, Gingrich suggested that Barney Frank and Chris Dodd should be put in jail. “All I’m saying is, everybody in the media who wants to go after the business community ought to start by going after the politicians who were at the heart of the sickness that is weakening this country,” he said.

Another transcendent moment in Gingrich hypocrisy. He risibly rationalized his deal, saying he was giving the mortgage company advice as a prestigious historian rather than a hired gun.

Maureen Dowd is a national treasure. She is like the third umpire in the old joke:

There was an argument between three baseball umpires. The first umpire said "I call 'em as I see 'em". "Ha," said the second umpire, "I call 'em as they are!" "They ain't nothing until I call 'em," said the third umpire.