politics isn't about policy

Politics isn’t about policy don’t put Shetland in a box

New rules barring public bodies from putting Shetland in a box on official documents have come into force.

Islands MSP Tavish Scott had sought to change the law to ban the “geographical mistake” which “irks” locals, by amending the Islands (Scotland) Bill.

The bill’s “mapping requirement” has now come into force, although it does give bodies a get-out clause if they provide reasons why a box must be used.

Mapmakers argue that boxes help avoid “publishing maps which are mostly sea”.

The Islands Bill, which aims to offer greater protections and powers to Scotland’s island communities, was unanimously passed in May.

Here is the full story, via Glenn Mercer.  You can’t call it “racist,”or “sexist,” might someone coin a future term for the objectionable act of…”putting my islands into a box”?

Politics isn’t about policy, installment #734

Matt Yglesias writes:

To borrow an idea from Robin Hanson, I think it’s useful to think about political conflict in terms of valorized figures. On the right, you see a lot of valorization of businessmen. On the left, you see a lot of valorization of pushy activists who want to do something businessmen don’t like. Formally, the right is committed to ideas about free markets and the left is committed to ideas about economic equality. But in practice, political conflict much more commonly breaks down around “some stuff some businessmen want to do” vs “some stuff businessmen hate” rather than anything about markets or property rights per se. Consequently, on the left people sometimes fall into the trap of being patsies for rent-seeking mom & pop operators when poor people would benefit more from competition from a corporate bohemoth.

Pollution, Climate Change and India’s Choice Between Policy and Pretense

Image result for pollution indiaDean Spears, one of the authors of Where India Goes has a new book on air pollution in India, Air. When I reviewed Where India Goes in 2017 I said it was the best social science book I had read in years. Spears is able to accurately explain academic work–much of it his own and with co-authors–in accessible language and to combine that with on-the-ground reporting to produce a book that is both informative and full of human interest. He brings the same skills to Air.

As Spears shows, pollution is killing Indians, especially babies, and those it doesn’t kill it harms as seen in statistics on stunting and respiratory disease. Spears isn’t naive, however, he knows that manufacturing is also bringing tremendous benefits. The issue, however, is that a lot of pollution in India comes from relatively low value activities like burning crops. Moreover, solar power in India is cost competitive with coal today, even before taking into account health benefits. Thus, the harms of pollution are tragic because they are unnecessary.

If the costs of pollution exceed the benefits why isn’t something being done? One of the things I like about Air is that it is clear that pollution in India is both a market failure and a government failure. The government has been slow to respond to pollution because much of the public remains unaware of pollution’s true cost and much of the true cost is born by children and future people who have no vote. In the meantime, the government enhances rational ignorance by refusing to fund even the most basic equipment to measure where and when pollution ebbs and flows. Instead the government engages in virtue-politics by banning plastic bags and creating odd-even restrictions on driving in Delhi. These activities are pointless, even counter-productive, but they are well publicized and the appearance of doing something matters more than reality.

Here’s one brilliant bit:

Just next to the Raebareli coal plant is a solar power plant. The solar plant is, in principle, capable of generating 10 MW. That capacity is 1 per cent of the 1000 MW capacity of the immediately neighbouring coal plant (which had another few hundred megawatts under construction when I talked with Gaurav).

I visited the solar plant on Independence Day. The ground around the solar panels was flooded with August rain. A shoe destroying walk through the mud and water brought me to the control room in a small building. There, a cheerful young engineer from Bengaluru watched a bank of computer screens. A TV monitor reviewed a list of fifteen highlights of the Prime Minister’s holiday speech that morning. The control room was set up in a museum-like display. The apparent goal was to impress visitors with modern renewable energy and with colourful displays of General Electric–branded software. The young engineer was excited to show me the screens. He clearly wanted the message to be good.

It was not good. That cloudy day, most of the dots were red, not green. The screens reported that the solar plant was generating 60 kW. The engineer assured me that one day it had gotten up to 7500 kW. A megawatt is 1000 kilowatts. So, at 0.06 MW, the solar plant was producing less than 1 per cent of the 10 MW that the signboard at the entrance promised, which would have been 1 per cent of the coal plant.

It is not surprising that a solar plant does not generate much electricity if it is built beneath the smoke of a coal plant with 100 times the capacity. Ordinarily, one places solar plants in the path of direct sunlight. This one was placed in the path of visitors.

Addendum: Case in point. India today bans e-cigarettes because of health risks!

Big business isn’t big politics

That is my recent essay, adapted in Foreign Policy, from my new book Big Business: Love Letter to an American Anti-Hero.  Here is the opening:

The basic view that big business is pulling the strings in Washington is one of the major myths of our time. Most American political decisions are not in fact shaped by big business, even though business does control numerous pieces of specialist legislation. Even in 2019, big business is hardly dominating the agenda. U.S. corporate leaders often promote ideas of fiscal responsibility, free trade, robust trade agreements, predictable government, multilateral foreign policy, higher immigration, and a certain degree of political correctness in government—all ideas that are ailing rather badly right now.

To be sure, there is plenty of crony capitalism in the United States today. For instance, the Export-Import Bank subsidizes U.S. exports with guaranteed loans or low-interest loans. The biggest American beneficiary is Boeing, by far, and the biggest foreign beneficiaries are large and sometimes state-owned companies, such as Pemex, the national fossil fuel company of the Mexican government. The Small Business Administration subsidizes small business start-ups, the procurement cycle for defense caters to corporate interests, and the sugar and dairy lobbies still pull in outrageous subsidies and price protection programs, mostly at the expense of ordinary American consumers, including low-income consumers.

…overall, lobbyists are not running the show. The average big company has only 3.4 lobbyists in Washington, and for medium-size companies that number is only 1.42. For major companies, the average is 13.9, and the vast majority of companies spend less than $250,000 a year on lobbying. Furthermore, a systematic study shows that business lobbying does not increase the chance of favorable legislation being passed for that business, nor do those businesses receive more government contracts; contributions to political action committees are ineffective too.

If you are looking for a villain, it is perhaps best to focus on how corporations sometimes help poorly staffed legislators evaluate and draft legislation. But again, national policy isn’t exactly geared to making businesses, and particularly big business, entirely happy.

References and further support are available in the book,

Department of Isn’t (Robin Hanson, Gnostic)

Food isn’t about Nutrition
Clothes aren’t about Comfort
Bedrooms aren’t about Sleep
Marriage isn’t about Romance
Talk isn’t about Info
Laughter isn’t about Jokes
Charity isn’t about Helping
Church isn’t about God
Art isn’t about Insight
Medicine isn’t about Health
Consulting isn’t about Advice
School isn’t about Learning
Research isn’t about Progress
Politics isn’t about Policy

That's from him.  No sex?  Can that somehow be signaling to get more sex?

How much does government policy affect pre-tax income?

SA few days ago Paul Krugman argued (Times Select, or here is a Mark Thoma summary) that it matters a great deal which political party rules in the United States.  Republicans tend to bring gilded ages, Democrats tend to bring greater income equality.  So much for the median voter theorem (is this less reason or more reason to trust politics?  And is this view supported by event studies of elections?  I doubt it.).

Andrew Samwick points to Krugman’s own earning power and wonders if W. deserves the credit.  Greg Mankiw piles on.  Even Brad DeLong disagrees with Krugman.   

Matt ("he really ought to be an economist") Yglesias sides with Krugman, noting that tax policy affects pre-tax earnings through induced effort (an unexpected yet appropriate dalliance with the supply side) and how the workplace is geared to produce maximum value.

Four additional points:

1. It is much easier for policy to liberate a "shackled top 1 percent" and boost their earnings than it is for policy to lift the huddled masses.  See Mark Thoma on Australia.  Measures of inequality capture the difference between these two groups, but for Krugman’s questions this is not a helpful aggregation.  It is easier to toy with the lot of small groups than with very large groups.

2. Bob Tollison used to tell me: "No one other than Michael Jordan ever got truly rich selling his labor."  If policy is going to liberate top earners, look to the growth in capital markets.

3. Krugman doesn’t have many data points.  The 20s have a string of Republicans.  Then there is Roosevelt/Truman.  He tosses out Eisenhower for being centrist.  Nixon was like a Democrat on social spending and regulation.  Krugman tosses out Clinton for governing like a right-winger.  Give this one to Andrew Gelman and let him bite.

I’m OK with these classifications of Eisenhower and Clinton.  The deeper point is that how a party or president governs is itself determined by underlying social, economic, and technological forces.  Which brings us back to the political party not mattering very much for pre-tax income distribution.

4. If we take the left-wing view that money doesn’t make people much happier, and hard work is an oppressive rat race, the change in the distribution of utility is much much less than the change in the distribution of income.  In fact it is easy to argue that the United States has become more egalitarian in terms of well-being.  Most people get penicillin, and in utility terms a $20,000 stereo isn’t much better than a $400 stereo.

Addendum: Here is more Brad DeLong summary and analysis.

Why do people hate the media so much?

Haven’t you noticed this?

I have a simple hypothesis.  No matter what the media tells you their job is, the feature of media that actually draws viewer interest is how media stories either raise or lower particular individuals in status.  (It’s a bit like “politics isn’t about policy.”)  That’s even true for this blog, though of course that is never my direct intention.

But now you can see why people get so teed off at the media.  The status ranking of individuals implied by a particular media source is never the same as yours, and often not even close.  You hold more of a grudge from the status slights than you get a positive and memorable charge from the status agreements.

In essence, (some) media is insulting your own personal status rankings all the time.  You might even say the media is insulting you.  Indeed that is why other people enjoy those media sources, because they take pleasure in your status, and the status of your allies, being lowered.  It’s like they get to throw a media pie in your face.

In return you resent the media.

A good rule of thumb is that if you resent the media “lots,” you are probably making a number of other emotional mistakes in your political thought.

Was it wrong to hack and leak the Panama Papers?

Let’s say a group of criminal defense lawyers kept a database of their confidential conversations with their clients.  That would include clients charged with murder, robbery, DUI, drug abuse, and so on.  In turn, a hacker would break into that database and post the information from those conversations on Wikileaks.  Of course a lot of those conversations would appear to be incriminating because — let’s face it — most of the people who require defense attorneys on criminal charges are in fact guilty.  When asked why the hack was committed, the hacker would say “Most of those people are guilty.  I want to make sure they do not escape punishment.”

How many of us would approve of that behavior?  Keep in mind the hacker is spreading the information not only to prosecutors but to the entire world, and outside of any process sanctioned by the rule of law.  The hacker is not backed by the serving of any criminal charges or judge-served warrants.

Yet somehow many of us approve when the victims are wealthy and higher status, as is the case with the Panama Papers.  Furthermore most of those individuals probably did nothing illegal, but rather they were trying to minimize their tax burden through (mostly) legal shell corporations.  Admittedly, very often the underlying tax laws should be changed, just as we should repeal the deduction for mortgage interest too.  But in the meantime we are not justified in stealing information about those people, even if some of them are evil and powerful, as is indeed the case for homeowners too.

Once again, politics isn’t about policy, it is about which groups should rise and fall in relative status.  And many people believe the wealthy should fall in status, and so they will entertain the morality of all crimes and threats against them.  These revelations will of course lead to some subsequent cases of blackmail, against Chinese officials for one group.

I had tweeted “Are your views on privacy and consistent? Just asking…” and my goodness what a response, positive and negative.  Most interesting of all, many people had never pondered the question before.  Somehow “good things” such as “privacy” and “transparency” cannot stand in such conflict because all good things, like all bad things, must come together.

Here is a good Kaddim Shubber discussion on FT Alphaville.

Here is Veronique de Rugy on the Panama Papers.

Here is Ray Lopez on the same:

1.  There’s a tension between US and foreign law firms and FATCA (United States Foreign Account Tax Compliance Act (FATCA) has the objective of reducing tax evasion by American taxpayers with foreign accounts).  This is because law firms are exempt from reporting on clients past crimes, not future crimes, however, money laundering is considered a future crime.  When a known criminal is setting up an offshore account with the help of a law firm, is the law firm an accessory to money laundering or not?  The better view is they are not:  it’s up to the client to report any offshore account to the government, and not the law firm’s responsibility.  That’s the better view, but see point #2, which rebuts this.

2.  There’s a tension between client confidentiality and tax treaties.  Check this out: https://www.lawsociety.org.nz/practice-resources/practice-briefings/FATCA-and-New-Zealand-Law-Firms.pdf   In New Zealand, which is probably representative of others, a passive non-financial foreign entity–which almost always will be a law firm trust account holding money from a client–has a duty under FATCA to report on the client to the US government (“know your customer” is the buzz phrase banks use, which as you know already are required to ‘spy’ on their customers).

Both points 1, 2 are relevant for the conduct of the law firm of Mossack Fonseca.  Except for the alleged destruction of evidence by them, I don’t see them doing anything that bad (by law firm standards; remember, any law firm of decent size has former crooks as clients, and for a firm in Panama I would say that’s not the exception but the rule!)
Did you know the Guardian media firm is closely connected to shell companies?  According to the FT: “…even the World Bank and other development finance institutions used offshore investment hubs, in a sign they have come to play “a systemic role in international investment flows”.”  Speaking of the FT, Tim Harford suggests some useful tax reforms.

From the comments
, here is Kai:

I practice law in cross-border banking and finance in China. I am puzzled by how non-professionals in this field view offshore jurisdictions as categorically related to criminal activity, embezzlement and corruption, etc.

Almost all cross-border transactions involve offshore jurisdictions at some level. For instance most companies listed on the HK stock exchange are incorporated in the Cayman Islands. Anything to do with Bermuda, Cayman, BVI, etc. in cross border transactions is very, very mundane.

According to the papers, Xi Jinping has relatives who are owners of offshore companies. How is that any sort of evidence of wrongdoing by them (much less of Xi Jinping)? I doubt anyone can provide an intelligent answer.

Maybe yes, maybe no, but I don’t see that the people rendering judgment know more about it than he does.

Humiliation, the soda tax, and deadweight loss

Catherine Rampell’s excellent column considers the case for a soda tax in Britain.  Here is one bit:

Why not just target the output, rather than some random subset of inputs? We could tax obesity if we wanted to. Or if we want to seem less punitive, we could award tax credits to obese people who lose weight. A tax directly pegged to reduced obesity would certainly be a much more efficient way to achieve the stated policy goal of reducing obesity.

Of course, “fat taxes,” even when framed as weight-loss tax credits, seem pretty loathsome. Why is . . . unclear.

We tax soda instead, even though that is less effective, for instance because soda drinkers may substitute into other sugary beverages.  We are unwilling to humiliate the obese by taxing them directly, and so our chosen policies do less to help…the obese.  (That’s assuming that attempting to shift their consumption behavior helps them at all, which is debatable.)  As Robin Hanson has told us many times, politics isn’t about policy…

Five case studies in politicization

This is a fascinating Scott Alexander take on tribalism and how political issues are framed, starting with Ebola.  As Robin Hanson would say, “politics isn’t about policy.”  Here is the segment on how climate change issues might be marketed to the Right:

Global warming has already gotten inextricably tied up in the Blue Tribe narrative: Global warming proves that unrestrained capitalism is destroying the planet. Global warming disproportionately affects poor countries and minorities. Global warming could have been prevented with multilateral action, but we were too dumb to participate because of stupid American cowboy diplomacy. Global warming is an important cause that activists and NGOs should be lauded for highlighting. Global warming shows that Republicans are science denialists and probably all creationists. Two lousy sentences on “patriotism” aren’t going to break through that.

If I were in charge of convincing the Red Tribe to line up behind fighting global warming, here’s what I’d say:

In the 1950s, brave American scientists shunned by the climate establishment of the day discovered that the Earth was warming as a result of greenhouse gas emissions, leading to potentially devastating natural disasters that could destroy American agriculture and flood American cities. As a result, the country mobilized against the threat. Strong government action by the Bush administration outlawed the worst of these gases, and brilliant entrepreneurs were able to discover and manufacture new cleaner energy sources. As a result of these brave decisions, our emissions stabilized and are currently declining.

Unfortunately, even as we do our part, the authoritarian governments of Russia and China continue to industralize and militarize rapidly as part of their bid to challenge American supremacy. As a result, Communist China is now by far the world’s largest greenhouse gas producer, with the Russians close behind. Many analysts believe Putin secretly welcomes global warming as a way to gain access to frozen Siberian resources and weaken the more temperate United States at the same time. These countries blow off huge disgusting globs of toxic gas, which effortlessly cross American borders and disrupt the climate of the United States. Although we have asked them to stop several times, they refuse, perhaps egged on by major oil producers like Iran and Venezuela who have the most to gain by keeping the world dependent on the fossil fuels they produce and sell to prop up their dictatorships.

We need to take immediate action. While we cannot rule out the threat of military force, we should start by using our diplomatic muscle to push for firm action at top-level summits like the Kyoto Protocol. Second, we should fight back against the liberals who are trying to hold up this important work, from big government bureaucrats trying to regulate clean energy to celebrities accusing people who believe in global warming of being ‘racist’. Third, we need to continue working with American industries to set an example for the world by decreasing our own emissions in order to protect ourselves and our allies. Finally, we need to punish people and institutions who, instead of cleaning up their own carbon, try to parasitize off the rest of us and expect the federal government to do it for them.

Please join our brave men and women in uniform in pushing for an end to climate change now.

The piece is interesting throughout, hat tip goes to MR commentator Macrojams.

The wisdom of Scott Sumner

Some on the left argue that consumption taxes will favor the ultra-rich because they consume a very small share of their income.  But if that’s so, then no tax regime will put much of a tax burden on the ultra-rich.  Just as you can’t squeeze blood from a stone, you can’t put a tax burden on misers.  As Steven Landsburg pointed out in one of my all time favorite posts, society views misers like Scrooge as being selfish individuals, when actually it’s people who consume a lot who are selfish. Misers leave more for others to consume.

In my only slightly cynical view, a lot of the debate about taxation is more about showing the wealthy that they need to lose (or win, on the other side of the debate) a few political battles than it is about actual canons of efficiency or for that matter even well-specified theories of egalitarian justice.  For instance I find that few proponents of a higher inheritance tax realize it will increase current consumption inequality, by encouraging the wealthy to consume more rather than paying the tax.  Nor do they seem to care, once this is pointed out.  I call this “the comeuppance” theory” and it is another example of Robin Hanson’s motto that “politics isn’t about policy,” but rather is a spat about which monkeys should have a higher or lower status.

Scott’s post is here, and it contains other points of interest.

Why blame only the Republicans?

When I blame people for their problems, Democrats and liberals are prone to object at a fundamental level.  One fundamental objection rests on determinism: Since everyone is determined to act precisely as he does, it is always false to say, “There were reasonable steps he could have taken to avoid his problem.”  Another fundamental objection rests on utilitarianism: We should always do whatever maximizes social utility, even if that means taxing the blameless to subsidize the blameworthy.

Strangely, though, every Democrat and liberal I know routinely blames one category of people for their vicious choices: Republicans…

Personally, I strongly favor blaming Republicans.  I think 80% of the blame heaped on Republicans is justified.  What mystifies me, however, is the view that Republicans are somehow uniquely blameworthy.  If you can blame Republicans for lying about WMDs, why can’t you blame alcoholics for lying to their families about their drinking?  If you can blame Republican leaders for supporting bad policies because they don’t feel like searching for another job, why can’t you blame able-bodied people on disability because they don’t feel like searching for another job?

Democrats and liberals who expand their willingness to blame do face a risk: You will occasionally sound like a Republican!  But why is that such a big deal?  Maybe you’ll lose a few intolerant hard-left friends, but they’re replaceable.  By taking a reasonable step – broadening your blame – you can avoid the vices of moral inconsistency and moral nepotism.  To do anything less would be… blameworthy.

That is from Bryan Caplan.  As Robin Hanson once opined, “politics isn’t about policy.”

My own view is to minimize blame in all directions, but of course Bryan is correct in pointing out this inconsistency.  Most people are willing to blame those whom they seek to lower in relative status, though I can’t say I really blame them for that.

Sentences to ponder

Stunningly, the postponement of marriage and parenting — the factors that shrink the birth rate — is the very best predictor of a person’s politics in the United States, over even income and education levels, a Belgian demographer named Ron Lesthaeghe has discovered. Larger family size in America correlates to early marriage and childbirth, lower women’s employment, and opposition to gay rights — all social factors that lead voters to see red.

That is Lauren Sandler.  Here is more, hat tip to Steve Sailer (and David Brooks).  And as Robin Hanson would say, “politics isn’t about policy.”

Assorted links

1. Review of the new Chris Hayes book.

2. Garett Jones on speed bankruptcy (pdf).

3. The politics of Obama vs. Romney; politics isn’t about policy!

4. NYT presents 32 innovations that will change our world; are you impressed by their list?  I like this one:

A team of Dutch and Italian researchers has found that the way you move your phone to your ear while answering a call is as distinct as a fingerprint. You take it up at a speed and angle that’s almost impossible for others to replicate. Which makes it a more reliable password than anything you’d come up with yourself. (The most common iPhone password is “1234.”) Down the line, simple movements, like the way you shift in your chair, might also replace passwords on your computer. It could also be the master key to the seven million passwords you set up all over the Internet but keep forgetting.

5. Are economics Ph.D programs teaching the right material?

6. More Paul Krugman on science fiction.

Warn people about two things

One problem with disclosure regulation is that people grow accustomed to the warnings and caveats and their eyes glaze over.  They stop paying attention.

So let’s say you are the Über-regulator.  You get to warn people about two things.  Once.

Of course they may not listen to you at all, but let’s assume you have enough credibility from your political post to be given half an hour on network TV and subsequent extensive coverage and commentary on blogs and Twitter.  That said, especially useful warnings, such as “You’re not as smart as you think” are perhaps especially likely to be ignored.  “Honor They Superior!” is perhaps also a non-starter, though you may try it if you wish.

Which two things do you pick for your warning?

“Driving is dangerous”

“Fight nuclear proliferation.”

“Don’t let your kid near a bucket.”

“Politics isn’t about policy.”

“Beware the Ides of March!”

“Some people out there suck!”

The correct answer is not obvious.  And what does this imply about regulation more generally?

I thank Bryan Caplan for a useful conversation on this topic.