Coyote Blog

Yesterday, I posited that current proposals for government health care are worse than other welfare programs, because they not only will cost a ton of money, but they will also, unlike say government housing, make my personal health care worse.

I only had to wait one day for an example (actually, I didn't have to wait at all, since I could just mine Europe and Canada for examples).

Massachusetts has now set the minimum level of insurance required to
comply with the state's individual mandate. Not only will every
resident of the state be required to have insurance by July of this
year, but by January of 2009, no one in the state will be allowed to
have insurance with more than a $2,000 deductible or total out of
pocket costs of more than $5,000. In addition, every policy in the
state will be required to cover prescription drugs, a move that could
add 5-15 percent to the cost of insurance plans.

After a lot of study, my family chose a high deductible health plan combined with a medical IRA (they actually call them something else, but I can't remember the abbreviation).  We had a low deductible plan, but ran the numbers, and found we would save tons with a higher deductible plan, particularly if we dumped the savings into the IRA.  We set the deductible at the level of economic pain we thought we could bear in a bad year.  Even if we had a medical disaster once every three years, we would still be ahead with the lower premiums and the IRA-style tax savings.  And if we don't have a disaster that frequently (we never have had even one in our lives) then we will build up some nice savings for retirement.

Of course, this makes too much sense to be legal.  It actually involves individual choice and stuff, and god forbid we be allowed to exercise that.  For our own good, of course.

I was sitting here today, and was trying to discern why the government-run health care issue made me more nervous than other government welfare programs.  I get ticked off, for example, about the horrendous rates of return (think negative interest rates) paid out by Social Security on what are nominally our retirement account premiums.  But I don't get nervous.  Why?

I think because unlike other welfare proposals that [just] cost us a ridiculous amount of money, the current plans for providing universal health care imply that my personal health care and health care options will get much worse.  When government provided housing, my housing did not get worse.  When government provided a ripoff retirement plan, my personal non-government retirement savings did not take a hit.  In all these cases, we paid out tons of money to provide some terrible base-level services for the poor and the true-government-believers in the middle class, but my options did not get worse.

However, in the case of health care, most proposals on the table will very likely result not only in much higher taxes, but also in my personal health care options getting worse.  The government will not want to provide multiple levels of service, and can't afford anything beyond "crappy", so as a result we will all end up with crappy service (Insert Rush song "trees" here).  A lot of crap is written about how great all these other socialized medicine services are, but thousands of people travel from other countries to have medical procedures in the states, and about zero travel the other way.  More on the topic of closing coverage gaps at the price of making your own personal care worse here.  More on why these gaps are not as large as advertised here.

Update:  Quick proof -- My chosen health plan is now illegal in Massachussetts

So I won't.  Which doesn't mean I haven't found all the squirming on multiple web sites immensely entertaining.  Jeff Goldstein, as is often the case, is perhaps the most entertaining.  While Jeff will never be invited to speak at a MoveOn rally, on the other hand it is about as easy to lump him in with Pat Robertson as to group "Little House on the Prairie" into a double feature with "Team America World Police."

Though I am not convinced it is an especially apt comparison for the Coulter remark, I did particularly note one observation.  Goldstein's commenter said, in part, this:

I am reminded of the whole "niggardly" thing.  Of course, we KNOW what
it means.  But, you cannot really use it unless you want to be
misunderstood and have your message distracted.

Jeff responded:

This is, of course, quite stunning and more than a bit dangerous to the cause of liberalism.

I mean, look again at what Steve just argued:  "Of course, we KNOW what
it means.  But, you cannot really use it unless you want to be
misunderstood and have your message distracted."

Translation: We know what it means, but we must assume nobody else does.  Therefore, their misunderstanding is to be countenanced and massaged"”which, in effect, empowers ignorance
rather than treating it as ignorance.  It is the perfect example of the
intellectual welfare state:  rather than working to force people to
break out a dictionary, we'd rather provide them with succor because,
well, they can't really be expected to learn things on their own,
right?  Those kinds of people?

I don't read Protein Wisdom all the time, so I am not sure if "intellectual welfare" is a term Goldstein uses a lot.  I coined it independently a few years ago, when discussing social security.

In my post earlier today, I analyzed my recent social security statement and found that the government was giving me a -0.8% (yes, that is negative) rate of return on my forced savings.  You can read that post for the methodology, which I admit was simplistic (I have a day job, after all) but I still think is pretty accurate.  There is not getting around the fact that the government is forcing
a retirement program on you that is such a ripoff that a private company would likely get
prosecuted for offering it.

One of the arguments I have seen go back and forth, and that I refer to in that post, is whether Social Security is a retirement plan or a welfare program (its a floor wax and a desert topping!)  One of the reasons this argument comes up so much is that its defenders take both sides of the question, depending on whom they are arguing against.  If you argue that as a welfare program, Social Security is terribly inefficient and pays too many benefits to richer workers, they argue it is a retirement program with premiums and you can't cut benefits to anyone who has paid in.  Argue as I did in this post that it is the worst retirement program in all of America, and its defenders say that you can't analyze it that way because there are welfare benefits embedded.

So I wondered, could I solve this with numbers?  I stared at my belly button for a moment, and decided that 6.5% was a good conservative private return number that I would be willing to plan my retirement around.  I plugged this number into my spreadsheet (Download socialsecurity4.xls) and found that my social security premiums, invested privately, would yield an annuity at 67 of $11,699 per month, or an amount 5.89 times larger than social security is currently promising me for the same inputs.  This tells me that only about 17% (1/5.89) of my taxes in social security are going to my own retirement.  The other 83% are going to a huge welfare program, either directly, as payments for someone else's retirement, or indirectly, through the inherent government inefficiency you accept when you provide intellectual welfare  (I define "intellectual welfare" as the government doing something for you because it doesn't trust you not to screw the task up if you did it yourself -- in this case, the task is saving for retirement).

Postscript:  As pointed out in my postscripts and the comments to the original post, taxes, inflation, spouse survival, etc.  all complicate the analysis, but most of the effects work both ways.   For example, Social Security provides some benefits to surviving spouses I don't include.  That potentially understates the value of the SS package.  However, as pointed out in the comments, private savings would be inheritable by my family in the case of my early death, and would dwarf SS survivor benefits in most cases.  Ditto for disability benefits.

A few weeks ago I got my annual "Your Social Security Statement" from the government.  This is a statement carefully crafted to look like it's telling you a lot while at the same time covering up Social Security's dirty little secret.  But with a spreadsheet and 5 minutes of work, one can figure out what is really going on.

The statement shows the total of my social security taxes paid into the system, including the employer share.  It also shows my taxed earnings per year, and my "benefits."  The main benefit is the monthly annuity payment Social Security will make to me after I retire.  My statement shows that $140,139 total taxes have been paid into the system on my behalf over the last 25 years.  Based on these taxes and (this is important) the assumption I and my employer will continue to pay in at least $7440 per year until I retire, I can expect an annuity at retirement age of 67 (under current law, which the statement makes clear can be changed at any time) of $1,985 per month.

So I built a spreadsheet (click to download excel file), going back to my first year of employment.  Each year, I added the social security taxes to savings, and grew the accumulated balance by some interest rate.  For past years I used actuals from the report, for future years I used the $7440 tax number the report uses to calculate the social security payout. 

This allowed me to answer a question:  If I had been able to take these social security taxes and instead put them in a savings plan, and then took the accumulated balance out at age 67 and bought an annuity (at current rates), what would be my monthly payment?  Well, assuming a very conservative after-tax rate of return of 5%, I would have $1,077,790 at age 67 to buy an annuity, which at current rates quoted on the Vanguard site, would give me $7,789 a month until I die.  This return is just about four times the amount I get from having the Social Security Administration manage the money for me instead. Ugh.  Also note that I did not assume "risky" equity investments or whatever straw man anti-reformers are using nowadays.    If I assume a higher return of 8%  (the stock market in the 90's returned something like 18%) then my annuity will be $17,860 per month, or 9 times the Social Security payout.  Double ugh.

In fact, this all opens up the obvious question, what actual rate of return is Social Security paying out on your "premiums?"  Well, in fact we can calculate this with the same spreadsheet.  I plugged in 2% for the interest rate.  No go -- resulting annuity is to high.  Then I plugged in 1%.  Still too high.  Could the government be paying you 0% on your money?  I plugged that in.  Still too high.  In fact, the implied rate of return on my money in the Social Security system is -0.8% a year.  In other words, not only is the government not paying me any interest, they are charging me to hold my money.

Social Security defenders insist that it is not a welfare program.  For example, Kevin Drum quotes this with approval:

The men in my family of my father's generation returned home after serving
their country and got jobs in the local steel mills, as had their fathers and
their grandfathers. In exchange for their brawn, sweat, and expertise, the steel
mills promised these men certain benefits. In exchange for Social Security taxes
withheld from their already modest paychecks, the government promised these men
certain benefits as well.

....These were church-attending, flag-waving, football-loving, honest family
men. They are rightfully proud of providing homes and educations for their
children and instilling the sorts of values and manners that serve them well as
adults. And if I have to move heaven and earth, now that they've retired, the
Republican party is NOT going to redefine them as welfare
recipients.

Fine, let's call it a retirement program.  Well, as a retirement program, it is a really, really big RIPOFF.  Ever worker in this country is being raped by this retirement plan.  In fact, it is the worst retirement program in the whole country:

• As we see above, it pays a negative rate of return
• It is not optional - you go to prison if you choose not to participate
• Unlike a private annuity contract, the government can rewrite your benefits level any time, and you have to take it.  In fact, my statement says "Your estimated benefits are based on current law.  Congress has made changes to the law in the past and can do so at any time.  The law governing benefit amounts may change because, by 2040, the payroll taxes collected will be enough to pay only about 74 percent of scheduled benefits."
• There are no assets backing this annuity!!  An insurance company that wrote annuities without any invested assets backing them would be thrown in jail faster than Jeff Skilling.  The government has been doing it for decades.

A couple of months ago, news-hog Eliot Spitzer had a well-publicized (what else?) suit against H&R Block for not providing high enough returns in its low-income retirement savings accounts.

New York Attorney General Elliot Spitzer [official website] Wednesday launched a $250 million lawsuit [complaint, PDF] against H&R Block
[corporate website], the largest tax preparation service in the US, for
fraudulently coaxing its customers into a retirement account plan that
lost them money. Spitzer said that money in the retirement accounts
decreased over time because the low interest rate did not cover the
fees associated with the account.

Doesn't this exactly match the situation in my social security spreadsheet?  At least H&R Block's customers had a choice whether or not to sign up.

Postscript: As is usual with retirement issues, tax is a messy topic, so I mostly left it out.  My spreadsheet is correct if you call it an "after-tax" rate of return.  This may mean the nominal rate is higher, but it got taxed, or it could posit some tax-free savings alternative to social security.  Note also that we pay income taxes on the amount that gets taxed by Social Security (at least our employee portion).  This means an IRA type replacement for social security would actually have higher returns and dollars at retirement than those in my spreadsheet, because it would eliminate or at least defer income taxes on the premium.

Also note that the analysis is all in nominal dollars, because that is the way the dollars are on my SS statement - there are not inflation escalators in the program.

Postscript #2:  When last social security was a national topic, opponents of reform got a lot of mileage out of the 2001-2002 bear market in stocks.  They would ask, what if people had invested in stocks, they would have lost their money.  Well, as of today, if you had invested every dollar of your retirement savings on the worst possible day, the 2000 peak in the Dow, you would still be up 5% today.  This is a disappointing  return of less than 1% annually, but is STILL higher than the negative return in social security.  And remember, we are using nearly the worst five year before and after dates in this generation.  A real-world steady investment in stocks over the last 20 years, with equal amounts each year, would be way up  (anyone with an exact number is welcome to post it in the comments).

Postscript #3:  In an earlier post, I took on Social Security as intellectual welfare:

Advocates for keeping forced savings programs like Social Security in
place as-is by necesity argue that the average American is too stupid,
too short-sighted, and/or too lazy to save for retirement without the
government forcing them.  Basically the argument is that we
are smarter than you, and we are going to take control of aspects of
your life that we think we can manage better than you can.  You are
too stupid to save for retirement, too stupid to stop eating fatty
foods, too stupid to wear a seat belt, and/or too stupid to accept
employment on the right terms -- so we will take control of these
decisions for you, whether you like it or not.  For lack of a better
word, I call this intellectual welfare.

Update #1:  In response to some comments, the spreadsheet does work right, it is just labeled wrong.  The column that is labeled "investment income" is actually the saved balance to date plus the investment income.  The "End of Year" column is the correct balance at the end of year after investment income and new contributions.

Update #2:  A commenter reasonably points out that investment at the top of the market in the Nasdaq would still be way underwater.  However, I took this point investment on the worst day as an extreme example.  Even in the Nasdaq, which is still off 50% from its peaks, a steady monthly investment from 1997 or 1998 to date would be above water in total.  Leftists do a lot of bad things for the country, but trying to scare average workers away from equity investments for the long-term is certainly on of the most hypocritical.  I guarantee that every liberal politician has a big fat chunk of their savings in equities, because they know that is the way to create wealth over the long haul.

Update #3:  In a follow-up post, using this same spreadsheet, I conclude that only 17% of my Social Security taxes are going to my retirement while 83% are welfare for someone else.

Dale Franks at QandO, quoting some from John Derbyshire, raise a key question that certainly has always concerned me as a pro-immigration libertarian:

As to why I think libertarians are nuts to favor mass uncontrolled
immigration from the third world: I think they are nuts because their
enthusiasm on this matter is suicidal to their cause. Their ideological
passion is blinding them to a rather obvious fact: that libertarianism
is a peculiarly American doctrine, with very little appeal to the
huddled masses of the third world. If libertarianism implies mass
third-world immigration, then it is self-destroying. Libertarianism is
simply not attractive either to illiterate peasants from mercantilist
Latin American states, or to East Asians with traditions of
imperial-bureaucratic paternalism, or to the products of Middle Eastern
Muslim theocracies.

In other words, by open immigration, are we letting in waves of people from statist traditions that will drive the US further away from an open, liberal society.  This worries me from time to time, enough that I don't have a fully crafted response that I consider definitive.  However, I want to offer some initial thoughts.  Before I do, here are two background points:

1. I think the freedom to move to another country, take a job there, buy property, live there, etc. is a basic individual right that should not be limited to the accident of not having been born originally in that country.  Freedom of association is a right of all human beings, not merely a result of citizenship.  I go into these arguments in much more detail here.
2. Note that immigrant status and citizen status are two different things.  Immigrant means that you are present in a country but not a citizen.  As an immigrant, I believe you should be able to own property, accept employment, and most of the other things you and I do every day.  However, immigrants don't vote.  Only the narrow class of people called citizens may vote, and there is some process where over time immigrants can meet some hurdles and become citizens.  The key problem for a libertarian, which I think Dale Franks would agree with, is "which status must you be to get government handouts?"  My view is that only citizens should get most handouts, like welfare and food stamps and such, though immigrants should have access to things like infrastructure (highways) and emergency services.  It is when one argues that any immigrant should have access to all this stuff that the whole immigration picture becomes a total mess.

With those couple of things in mind, here are my thoughts on the issue Franks raises:

• The US is not made up primarily of Scots and Dutch, two areas that can legitimately claim to have strong liberal traditions.  Most of our past immigration has come from Ireland and Germany and Scandinavia and Eastern Europe.  None of these areas particularly have a liberal tradition, and many were nationalistic-militaristic-paternalistic governments.  Also, we may forget it today, but when countries like Ireland where a large source of our immigration in the 19th century, they were a third world country at the time.  Just look at Vietnam -- it has one of the worst traditions I can think of, but as a class Vietnamese immigrants tend to be capitalist tigers.
• Depending on how one counts it, US citizens are already 65%-85% statist anyway, so I am not sure immigration is going to change the mix negatively.  In other words, the statist train has already sailed.  In fact, statism has flourished in this country from 1930-1980 during exactly the same period of time we were most restrictionist in immigration.  Sure, correlation is not causation, but certainly you can't prove to me that restrictionist immigration slows statism in any way. 
• Much of the statist economic policies in this country were launched by Wilson and Roosevelt, from two of the more blue-blooded families in America.  Now this may not mean much.  What I don't know, because I don't know enough history of the period, is this:  Did support for New Deal (and more extreme socialist NRA-type policies) come disproportionately from new immigrants?  My sense is exactly the opposite, that in fact some New Deal policies like the minimum wage were aimed by nativists at circumscribing the opportunities of immigrants.
• In effect, the author is advocating that we limit the freedom of movement and property ownership of people not born in the US because we are afraid that these new entrants into our country will bring political pressure to undermine individual rights.  I think that is a legitimate fear, but if I accept that argument, I don't know why I would not also have to accept the argument that we should take away the freedom of speech from people who argue for limitations of individual rights.  In both cases, we are giving political access to people who want to undermine our basic liberties.  My conclusion:  I can't go there in either case.  I refuse to put a political test on the exercise of individual rights, even for people with really bad politics.
• A well-crafted welfare regime would make the problem a lot better.  I am not so unrealistic to expect the welfare state to go away tomorrow, but I do think that the political will can be mustered to deny substantial benefits to new non-citizen immigrants.  Which way we go on this will decide whether we can open up immigration.  If welfare handouts to immigrants are limited, then new immigrants will tend to self-select towards those looking to work hard and take risks to make it on their own.  This will mitigate the author's concern, and is in fact how we have maintained our culture of liberality through a history that was dominated mostly by open rather than closed immigration.  If welfare handouts are generous to new immigrants, then immigrants will self-select to people looking to live off the state.  If we insist on the latter, then I guess I will agree that immigration needs to be limited (though there is an even better reason for doing so in that we will, in that case, surely bankrupt ourselves.)

No state shall ... deny to any person within its jurisdiction the
equal protection of the laws  - 14th Amendment

The Arizona Republic had an article in the lead position on the business page that really got me fuming.  Here is the headline:

Bioscience push paying off.  But analysis says Arizona must do more

Apparently the Arizona and Phoenix governments decided several years ago it was their job to preferentially invest in getting biotech companies to move to Arizona.  And this article was about a consulting study the government engaged to see how they were doing against this original plan. 

Arizona's lucrative bet on the biosciences is yielding more high-wage
jobs, federal research dollars and new buildings that are expected to
birth scientific breakthroughs for decades to come.

But the state needs to accomplish a lot more to establish a thriving
research-based economy, particularly providing enough money, lab space
and support that will allow small research companies to grow and
prosper.

The study can be summarized as "The government spent lots of money.  Biotech jobs increased in Arizona, though we can't establish a link between the government spending and the job growth.  The government needs to spend even more money in the future."  These conclusions are from Battelle, a technology consulting company whose fortunes depend almost entirely on government spending for technology projects, and, magically, they came to the conclusion that government needs to spend a lot on technology projects.

Equal Protection

I seldom hear this argument about corporate welfare, but what the hell ever happened to the equal protection clause?  From the perspective of an Arizona corporation, my government is taxing me and every other business and handing our money over to businesses that call themselves "biotech."  What suddenly gives these other businesses such favored status?  Why is biotech somehow more desirable such that they are more equal under the law?   Or, for those of you on the Left who don't think businesses have equal protection rights, what about Arizona workers?  Why are workers in every other industry taxed so biotech workers can have more secure, higher paying jobs? 

The Worst Investor

Government is the worst investor.  I won't go into how bad they are historically at picking winners, but will make a different point this time.  Consider this hypothetical: 

You have some money to invest in real estate, and engage a consultant to invest your money for you.  The consultant comes back and says that he chose to invest in the most sought-after single property in town, where hundreds of other people were bidding against you for the project, but eventually you outbid them all and got it. 

What would be your reaction?  Mine would be rage and horror.  Why the hell did my consultant choose the project with the most competition, so prices were bid up into the sky?  How am I ever going to get a good return from that?  (Ask yourself what return the Japanese got for their high-profile real estate purchases of the eighties and nineties).

But this is exactly what Arizona has done.  They picked the sector to subsidize and fight for corporate relocations - biotech - that every other state and municipality in the US has also chosen as their highest priority.  They even admit this in their report:

Battelle representatives said Arizona's challenge is that bioscience is
an ultracompetitive field, and states across the nation are pursuing
initiatives to bring the good-paying jobs that the sector promises.

In business school, I would get an "F" for this.  Choosing to subsidize biotech means that for every potential company relocation, Arizona and Phoenix are up against ten other cities and states also throwing subsidy and tax abatement packages out there.  Stupid.

Circle Jerk

It just symbolized for me how stupid all this is when I saw that the big payoff of this state government spending was to attract ... federal government spending:

National Institutes of Health grants issued to Arizona-based
institutions jumped 30 percent from 2002 through 2005. That funding
growth outpaced the nation's top 10 research states.

No Linkage of "Investment" to "Returns"

When private firms make investments, they carefully track the returns from this investment to see if it was worth it.  However, when government makes what it calls "investments", this is impossible.  The study claims that biotech jobs in Arizona have risen faster than the national average, but shows no link to the government spending that had taken place.  Probably because there was little relation.  The fact is that just about any job sector you can name in Phoenix -- from electronics to garbage sorting -- has grown faster than the national average because Phoenix as a whole has grown faster than the national average.  Taking credit for the rising tide is a classic politician behavior.  Companies and individuals are moving to Phoenix because they like the climate and relatively low taxes and regulation, of which the latter are only hurt by corporate welfare programs for favored few.

Prisoner's Dilemma

I have written before how much the government subsidization of corporate relocations looks like a prisoner's dilemma game. 

I hope you can see the parallel to subsidizing business relocations
(replace prisoner with "governor" and confess with "subsidize").  In a
libertarian world where politicians all just say no to subsidizing
businesses, then businesses would end up reasonably evenly distributed
across the country (due to labor markets, distribution requirements,
etc.) and taxpayers would not be paying any subsidies.  However,
because politicians fear that their community will lose if they don't
play the subsidy game like everyone else (the equivalent of staying
silent while your partner is ratting you out in prison) what we end up
with is still having businesses reasonably evenly distributed across
the country, but with massive subsidies in place.

The practice of state governments spending massive amounts of tax money to move a few jobs over the state line, and then having other state governments spend even more money to move the jobs back, is a war of escalation that leaves everyone worse off except a few players with political pull or who work in a fair-haired favored industry.

It's all About the Sex Appeal

Here is the bottom line:  Programs like this are for politicians.
Period.  They benefit politicians by giving them things they can say in
elections, like "I brought biotech jobs to Arizona,"  which sounds
better than "I brought garbage-sorting jobs to Arizona."  This in
effect answers the equal protection question of "why biotech?"  The
answer is that biotech is currently sexy, and politicians in their focus
groups have found that tbiotech resonates the best among voters.  All of
which makes for a really crappy approach to "investing."

From Arnold Kling, one of those articles so good I have trouble excerpting it to do it justice.  Here is just a small taste of some of the principles he puts forward:

1. Liberty is important for its own sake. People are entitled to make their own choices.

2. There are other values in addition to liberty. However, many
noble causes end up infringing on liberty without achieving their
desired ends. Government policies should be evaluated on the basis of
their consequences, not on the basis of how they make us feel. It may
feel good to set a minimum wage, to impose rent control, or to declare
a war on drugs, but the evidence is that such policies tend to work to
the detriment of their intended beneficiaries.

3. I value relieving the suffering of others. However, compared with
liberals, I have considerable humility when it comes to advocating
taking other people's money in order to satisfy my urge to alleviate
poverty.

4. Corporate power is adequately checked by market forces.
Competitors are the main force protecting consumers. Alternative job
opportunities are the main force protecting workers. For corporate
power to be a threat, it must be allied with government power.

Please, go enjoy the whole post.

PS- OK, if you really aren't going to read the whole thing, here is another taste:

I believe that in reality what has helped the less fortunate is
economic growth. Today's elderly are affluent not because of Social
Security, but because of all of the wealth created by private sector
innovation over their lifetimes. Government involvement in health care
and education is an impediment to progress in those fields. Job
training and welfare are demonstrable failures.

When I see statements like this, I am left to wonder whether folks on the left really believe this, or if it is just throwaway political rhetoric which no one really expects intelligent people to believe (key passage in bold):

But how are people dealing with these drops on their own today?
Mostly by going into debt. As I show in my book, median household debt
as a share of income for married parents was more than 125 percent of
income in 2004. The economist Herb Stein once said, "If something can't
go on, it won't." And the debt hemorrhage of the American family simply
can't go on.

If the returns of rising risk add up to the ability to borrow more
to dig oneself out of short-term holes (thus digging a deeper long-term
hole), then I think we can safely say that most Americans would be
happy to give up the returns to obtain greater security.

But here's the kicker: We can provide security and help our
economy. Just as businessmen and entrepreneurs are protected against
the most severe economic risks they face to encourage economic
investment and growth, we are most capable of fully participating in
our economy, most capable of taking risks and looking toward our
future, when we have a basic foundation of financial security.

How are businessmen and entrepeneurs protected?  By who?  I own and run my own small business, and I have yet to encounter
anyone who has given me any help or succor in our bad years. Or good
years. I don't even get covered by the minimum safety net type stuff my
employees have (workers comp, unemployment) without paying extra out of
my own pocket, which they don't have to do.

This is exactly the kind of throwaway absurdly false statement that
makes it impossible for me as a small business owner to take anyone on
the left seriously, however much I am attracted to them for their
position on a variety of social and war issues. I am sure that this is
the type of statement that most of his readers on the left nod their
heads to, sure that all of us business owners are all dialed into the
fat life somehow via the government, when in fact I spend most of my
life dealing with the myriad of government-required wastepaper that
makes it nearly impossible to run a business at all.

  I am certainly willing to believe that there are certain Fortune
100 companies that recieve all sorts of government rents -- Steel
companies, in the form of protectionism; Wal-mart, in tax abatements
and eminent domain handouts; ADM, in the form of ethanol subsidies;
tobacco companies, in the form of government roadblocks to new
entrants.

However, these type of large politically connected corporations make
up about .001% of the total mass of corporations. And, entrepeneurs,
unless they are already rich and powerful from a previous business,
never get any breaks and in fact often face government roadblocks set
in place by powerful incumbents with political pull. I am all for
eliminating these coporate welfare handouts and incumbent protection
schemes. Before you scream aha! remember that 3 of the 4 government
rent recipients I listed as examples are beneficiaries of programs from
the left side of the aisle.

I discussed this risk-shift concept in more depth here.  One thing I didn't mention in the previous article was the author's attempt to tie household debt to income risk.  I skimmed the book and didn't see any
empirical linkage between rising income uncertainty and household debt.
I am willing to believe they both went up at the same time, but
correlation is not equal to causation. Ten years ago, when folks
lamented rising household debt, it was an issue of personal
responsibility and having the discipline to live within one's means.
Are we past that now? Is debt really going to be added to the list of
things nowadays that are-not-my-fault?

Update:  If he is referring to stuff like this, I share his outrage.  But it doesn't justify his general statement.

I guess it's inevitable come election time, but a cottage industry has arisen of late to spread the word that the US economy is broken and that conditions for all but the rich are actually eroding.  This historically has been a winning strategy -- Remember, in late 1992 Bill Clinton campaigned with the absurd (but generally unchallenged in the media) contention that it was the worst economy since the Great Depression.  Most of the lamentations about the current condition of the poor and middle class are presented with the standard populist baggage that the economy is zero-sum, and these groups ills are somehow related to and the result of the income growth of the very rich.

Jacob Hacker of Yale now adds to the chorus, arguing that in addition to worse material fortunes, the middle class faces more risk.  As someone who gave up a good, high-paying job in corporate America for the risk roller coaster of running by own business, I have little sympathy -- after all, I am part of his trend and I happily chose my path.  And its astonishing to me in this day and age anyone can argue that we have too much of a culture of personal responsibility.  Please.

However, rather than fisking this in depth, I will leave the task to my much more capable ex-roommate from Princeton, who also happens to be a senior something-or-other at Cato, Brink Lindsey:

But if we're talking about
security from material deprivation, that's a different story. Let's
start with the biggest risk of all: that of premature death. Back in
1970, during Mr. Hacker's golden age of economic stability and
risk-sharing, the age-adjusted death rate stood at 12.2 deaths per
1,000 people. By 2002, it had fallen more than 30%, to 8.5 per 1,000.
In particular, infant mortality plummeted to 7.0 from 20.0, while the
number of Americans killed on the job dropped to three per 100,000
workers from 18.

Next, look at the two main
indicators of middle-class status: a home of one's own and a college
degree. Between 1970 and 2004, the homeownership rate climbed to 69%
from 63%, even as the physical size of the median new home grew by
nearly 60%. Back in 1970, 11% of Americans 25 years of age or older had
a college or higher degree. By 2004, the figure had risen to 28%.

As to consumer possessions, the
following comparison should suffice to make the point. In 1971, 45% of
American households had clothes dryers, 19% had dishwashers, 83% had
refrigerators, 32% had air conditioning, and 43% had color televisions.
By the mid-1990s all of these ownership rates were exceeded even by
Americans below the poverty line.

No matter how the
doom-and-gloomers torture the data, the fact is that Americans have
made huge strides in material welfare over the past generation. And
with greater wealth, as well as improved access to consumer credit and
home equity loans, they are much better prepared to deal with the
downside of increased economic dynamism.

Mr. Hacker leans heavily on his
findings that fluctuations in family income are much greater now than
in the 1970s. But research by economists Dirk Krueger and Fabrizio
Perri has shown that big increases in the dispersion of income have not
translated into equivalent increases in consumption inequality. In
other words, most Americans are able to use savings and borrowing to
maintain stable living standards even in the face of economic ups and
downs. And those standards are much higher than those of the
all-in-the-same-boat era.

Mr. Hacker, however, shows little
interest in providing such context or balance. Fully committed to what
could be called a "free market bad, big government good" narrative, he
simply ignores data that point in the other direction. Thus he
lambastes reforms such as Health Savings Accounts and Social Security
privatization for shifting risks onto individuals while failing to
mention that the policy status quo imposes massive risks of its own.

I know Brink has been finishing up his new book.  I would love to see him start blogging again.

More Thoughts:  I have a couple of thoughts of my own on the risk issue:

• Risk, I guess defined as income volatility, may be higher for the average person today that it was in 1970.  However, in a broader context, it is still drastically lower than any time in history or than in most places in the world.  Certainly pre-WWII people had substantially more risk in their income, particularly in the agricultural sector, which dominated the economy of this and other countries through most of history.  In subsistence agricultural economies, every year even the most productive and competent people face not just the risk of income loss but starvation and extinction through factors wholly beyond their control.
• The vast majority of the risk reduction people experienced in this country after WWII came from the operation of the private market economy, and not from government programs.  It was the incredible productivity growth, export growth, and technology growth of American industry that provided whatever security people might be nostalgic for.
• Further, the author worries about a risk-shift.  But in the 50's and 60's, there was very little risk in the system.  Corporations faces little risk in world markets, executives at corporations faced little risk to their jobs, and most workers faced little risk.  There has not been a risk shift -- this implies there was once some Atlas that bore the burden of all this risk and has now shrugged.  One might argue that there is more risk in the whole system - corporations are not guaranteed their market share so workers are not guaranteed their jobs.  The author tries to make it a populist argument, as if rich folks are shrugging off risk onto the poor.  The fact is that everyone faces more income volatility today, from largest corporation to lowest paid worker.  The good news, as Mr. Lindsey points out, is that this volatility is around a much higher mean.
• The costs of income security programs were always funded by workers
  themselves.  There was never a time when this security was provided by a mythical "someone else".  General revenue programs like welfare and defense over
  the last 30 years have been effectively funded by "the rich", since by
  any definition, that is who pays the income taxes.  However, programs
  like social security, Medicare, and unemployment are all based on
  payroll taxes with caps that mean that most of the tax is paid for by
  the poor and middle class themselves  (some of these are technically
  paid as a percentage of wages by the employer, but trust me that they
  have the same effect on take-home pay as if they had been deducted
  directly from the employee's check).  To the extent workers have
  security, it is only because they have been forced to buy and pay for
  an insurance policy.  So again, there can be no shift, because the workers bore the cost of the insurance themseleves.  Are they getting good value for this insurance?  I don't know --
  nobody knows.  Many reform proposals the author worries will further
  increase risk in fact are structured to put this insurance premium back
  in the hands of the worker, to let him or her decide if and how they
  want to spend it to insure themselves.
• The current obsession with this topic of risk strikes me as a case of white collar bias.  I am not sure anyone but the highest seniority workers ever had this mythological income security in the blue collar sector.  Layoffs and technology-based job obsolescence that created turmoil for blue-collar workers never seemed to touch white collar workers in the same way.  My sense is that what's new today is that middle class white collar workers are now facing these same forces of change, in many industries for the first time.  In fact, a skilled machinist is probably more secure in his job today than an account paybables clerk.  For years, the left has joined unions in criticizing companies like GM for continually cutting blue collar jobs without touching bloated white collar payrolls.  It's odd to see them jump suddenly to the other side of the issue.
• I hate to point out the obvious, but what government income-risk-management program has gone away since 1970, other than welfare reform?  Social Security, unemployment insurance, food stamps -- they all exist, most at levels higher than 1970.  Government-funded health care programs cover far more people for far more stuff.
• Certainly some private practices have changed that may affect employee risk.  It is interesting that the author mentioned 401K's.  To Hacker, shifting from defined benefits pensions to 401K's is an increased risk.  I am sure he would point in part to plans like Enron's where 401K holders took a bath because they were encouraged to funnel a lot of their savings into Enron stock.  But most 401K plans don't work that way, and it does not matter since defined benefit plans are even worse.  Defined benefit plans presuppose that the company you work for will remain financially solvent for decades, and they assume workers will never switch jobs, since they are not very portable.  Defined benefit plans are horrible for workers  -- it reduces their flexibility and increases their risk.  401K's are a fabulous, worker-empowering invention and are bad only for a few union leaders and large pension fund managers (e.g. Calpers) who gain political power by virtue of the money they control.
• Yes, many jobs are less stable, but there is no evidence that there are long-term unemployed people out there.  The nature of the people losing work and the job market today has changed, such that there are much better tools to find new work, and there is more work out there for their skills.  White collar workers today probably find new work easier than blue collar workers in West Virginia ever did in the 1950's and 1960's when the mines closed.  My guess is that most everyone from Enron has found a new job (or jail cell).  There are people in Appalachia who still haven't found a job 40 years after the mine closed.

I hate the term "pro-business."  In my mind, it helps to define what is wrong with the political choices we are presented with in this country.  All of us in civics class were taught the statist "heads I win, tails you lose" political spectrum from left to right.  On this spectrum, everyone is in favor of government intervention and the sacrifice of one group of people to another.  The only thing that varies across the scale is who is the beneficiary of the plunder and the targeted areas of intervention.  For years, most of the politicians who have called themselves "pro-business" were not free market capitalists -- they spent much of their time in office sending their businessman-buddies slices of pork, zoning variations, special permission to trash other people's property (e.g. via pollution) etc.

Beyond the fact that we small government libertarians and anarcho-capitalists are given no spot on the civics class political spectrum, I have always been frustrated at being lumped together with "pro-business" politicians, and have been asked to defend (which I won't and can't) various subsidies and corporate welfare.  An example of my attacks on this type of corporate welfare crap are here and here.

So, without further comment, I present this great except from an article by Gary North of the Mises Institute:

The idea that businessmen are strong defenders of the free
enterprise system is one which is believed only by those who have never
studied the history of private enterprise in the Western, industrial
nations. What businessmen are paid to worry about is profit. The
problem for the survival of a market economy arises when the voters
permit or encourage the expansion of government power to such an extent
that private businesses can gain short-term profits through the
intervention into the competitive market by state officials. Offer the
typical businessman the opportunity to escape the constant pressures of
market competition, and few of them are able to withstand the
temptation. In fact, they are rewarded for taking the step of calling
in the civil government.

The government's officials approve, but more to the point, from the
point of view of the businessman's understanding of his role,
shareholders and new investors also approve, since the favored
enterprise is initially blessed with increased earnings per share. The
business leader has his decision confirmed by the crucial standards of
reference in the market, namely, rising profits and rising share prices
on the stock market. No one pays the entrepreneur to be ideologically
pure. Almost everyone pays him to turn a profit.

This being the case, those within the government possess an
extremely potent device for expanding political power. By a
comprehensive program of direct political intervention into the market,
government officials can steadily reduce the opposition of businessmen
to the transformation of the market into a bureaucratic, regulated, and
even centrally-directed organization. Bureaucracy replaces
entrepreneurship as the principal form of economic planning.
Bureaucrats can use the time-honored pair of motivational approaches:
the carrot and the stick. The carrot is by far the most effective
device when dealing with profit-seeking businessmen.

Those individual enterprises that are expected to benefit from some
new government program have every short-run financial incentive to
promote the intervention, while those whose interests are likely to be
affected adversely "” rival firms, foreign enterprises, and especially
consumers "” find it expensive to organize their opposition, since the
adverse effects are either not recognized as stemming from the
particular government program, or else the potential opponents are
scattered over too wide an area to be organized inexpensively. The
efforts of the potential short-run beneficiaries are concentrated and
immediately profitable; the efforts of the potential losers are
dispersed and usually ineffective.

Congrats to Santa Barbara for breaking new ground in government paternalism:

The City Council here had already created a class of affordable housing
several years ago for people making up to 200% of the median income.
Last week, they agreed to tailor the Los Portales project for people
making up to 240%, or nearly $160,000. (To keep these affordable condos
affordable, buyers would be subject to price controls on resale that
would restrict any price increase to about 2% a year.)

Wow, government housing projects for people who make $160,000!  I loved this quote:

"it's hard to get sympathy for people making $160,000 a year if you're
down in Texas or something," said Bill Watkins, head of the UC Santa
Barbara Economic Forecast Project.

No shit.  So, why the project? 

But this is Santa Barbara, a built-out city hemmed in by the Santa Ynez
Mountains to the north, the Pacific Ocean to the south and politics in
every possible direction. And this is believed to be Santa Barbara's
last vacant lot big enough to hold a housing development.

So this is just the fault of geography and the bad old supply and demand system, right?  Well, it turns out the government had just a little to do with it too:

The city is zoned for 40,005 housing units. About 38,000 have been
built, and the only housing construction these days is in-fill: a few
units here, a few there. Unlike other land-poor cities, Santa Barbara
has been loath to tear down large swaths of outdated structures and
rebuild, said Paul Shigley, editor of the California Planning &
Development Report.

"They think they've got paradise," Shigley said. "They don't want it to change."

The tallest building here is the eight-story Granada Theatre, built in
1924. It could never be replicated today, in part because the City
Charter strictly limits buildings to 60 feet, about four stories. And
even four stories is a hard sell.

Oh, so the lack of new lots is an artificial government zoning limit, AND the government limits the height of new building to just a few stories AND the government won't allow tear down and gentrification of old neighborhoods.

By the way, housing projects like this in expensive areas are really just massive corporate welfare subsidies of local businesses.  If workers really need their housing subsidized to live there, and the government does nothing, one of two things happen:  Either busineses go somewhere else cheaper, or else they have to pay their employees more to live in the area.  By subsidizing this housing, the local government is in effect subsidizing local businesses by letting them pay lower wages.  In particular, this is typically a subsidy of tourist businesses (hotels and restaurants) which have a hugely disporportionate influence on local governments and who typically are tied to the local area and can't leave.  The town of Vail, for example, has subsized similar housing under presure from the ski resorts.

Hat tip: Hit and Run

I missed it when it first came out, but Jack Benway over at Arizona Watch has a nice post in defense of free immigration.  His point, as was mine here, is that the problem is the welfare state, not immigration. 

A prohibition on immigration from any source country violates the basic
principles upon which the US was founded "“ that life, liberty and property are
the inalienable rights of all people unless they sacrifice them by the forceful
denial of another person's pursuit of these same rights. These rights don't stop
at the US border. This does not mean that immigrants should not be screened and
naturalized and subject to the laws of the US. It does mean that the
artificially low quotas that place the current illegals in the position of
criminals by virtue of their presence here are morally wrong. These laws must be
repealed.

And chaos will ensue. What about all the services these illegals use at the
expense of taxpayers? We can't afford this. That's correct, we can't, so stop
offering these entitlements and services "“ to everyone.

Finding this post helps me roughly double my estimate of open immigration supporters here in Arizona (from 1 to 2).

Update:  This issue is really a heated on in Arizona.  It has even divided the writers at Arizona Watch, with Bridgett disagreeing significantly from Jack.

So we're going to build a wall and send an army to the border.

Maintaining a military to defend a group of people against outsiders who wish to use force against them is one of the core functions of government.  Even crazed libertarian anarcho-capitalists like myself concede it as a function of government.  If libertarians were to have their version of the ten commandments, the only phrase that would have to be on the stone is "Thou shalt not deal with thy neighbor through force or fraud."  The government maintains police and a military to handle the people who wish to violate this one commandment.

Throughout the years, countries have built armies and fortifications to defend against invaders who wanted to loot their lands, or steal their property, or impose their own version of racial or religious uniformity.  The US Army itself has fought for freedom, it has fought to restore democracy and individual rights, it has fought to stop genocides. 

Today, the US Army sallies forth again, to fight for and defend .... what? 

It fights to stop waves of Mexican immigrants that are dangerous because they ... want to freely exchange their labor with US Citizens?

It fights to protect Americans from ... competition for unskilled labor jobs?

It valiantly rides forth to make sure Americans never face the horror of ... interacting with someone with only broken English?

The soldiers racing to the borders are not fighting for me, because I am not in danger.  And neither is anyone around me here in Arizona -- no one from outside the border is threatening me with force or fraud (surprisingly frequent emailers sending me messages about Mexicans all being diseased criminals notwithstanding).  Its not like I live blithely ignorant of the border area in Kansas.  I life in Phoenix, and run businesses  right down on the border.  I don't feel a threat or danger.  In fact, the only danger I see is that the army may come down and drag families who are my friends out of their homes and out of the country (or into concentration camps, as one conservative writer longed for).

Immigration opponents are sometimes a little hazy about what danger they are trying to fix.  I agree there is a problem with the welfare state when it meets immigration, which I discussed here and proposed a solution for it here.  Democratic politicians still are confused on this particular problem, wanting some immigration solution but refusing to consider limiting access to the welfare state.   If the problem is infrastructure (police, prisons, schools, etc.) then it could be possible to provide national funds to border regions for this purpose, rather than for armies and walls (the Feds, after all, are handing out hundreds of billions to New Orleans).  And if the problem is too many people who don't look like us Anglo-Saxons, well, sorry  (If you don't think that this is the real issue for many anti-immigration folks, think about the recent scare headlines that soon a majority in the US may be Hispanic.  Can you imagine similar anxiety over the headline "majority of US may soon be of Canadian descent"?)

Update:  Nick Gillespie comments on the fact that Congress has given its official sanction to my speaking English.

Thank you, Middle Eastern 9/11 hijackers, for finally getting the point
through our thick skulls (forgive our slowness, but all too many of us are
descended from immigrants) that the greatest security threat to the United
States is the influx of Spanish speakers from across the border with Mexico.

Christ, it's bad enough that we have to eat foreign food, live in states
with Spanish-derived names, and answer that extra question about which
language to use at the ATM. (Thought experiment: How much is that extra
second or two of time slowing down the U.S. economy and driving down our
productivity, precisely at the moment when the Chinese are breathing down
our
necks like a bunch of post-industrial railroad coolies? You can be damn sure
that the Chinese government doesn't allow ATM users to pick their own
language.)

As I have written before, I have gotten more bizzaro emails on my pro-immigration stand than anything else I have written about.  Gillespie apparently has had the same experience.

More than any subject on Coyote Blog, my immigration posts have engendered more disapproving comments than anything else I have written.  I won't repeat my position except to say that I don't care if immigration is currently illegal, because my point is that it should be legal.  In short, my stance has been that our rights do not flow from the government but from our basic humanity, and therefore activities like association, employment decision-making, and property purchase should not be contingent on citizenship.  Its one of those arguments where I wish many on my side of the argument would shut up -- If the best argument you can muster for immigration is 'who will pick the lettuce', you are not helping very much. 

For the first 150 years of this country's history, our country was basically wide-open to immigration.  Sure, there were those opposed (the riots in NYC in the 19th century come to mind) but the opposition was confined mainly to xenophobes and those whose job skills were so minimal that unskilled immigrants who could not speak English were perceived as a threat.   It was only the redistributionist socialism-lite of the New Deal and later the Great Society that began to make unfettered immigration unpopular with a majority of Americans, who rightly did not wish to see the world's poor migrate to the US seeking an indolent life of living off of government handouts.

But, as Congress debates a series of immigration plans that make not sense and don't seem internally consistent, I will propose my own.  I hope that this plan will appeal to those who to date have opposed immigration because of the government handout problem.  I am sure it will continue to be unappealing to those who fear competition in the job market or who don't like to be near people who don't speak English very well.  This is an elaboration of the plan from this post:

1. Anyone may enter or reside in the US. The government may prevent entry of a very short list of terrorists and criminals at the border, but everyone else is welcome to come and stay as long as they want for whatever reason.  Anyone may buy property in the US, regardless or citizenship or residency.  Anyone in the US may trade with anyone in the world on the same terms they trade with their next door neighbor.
2. The US government is obligated to protect the individual rights, particularly those in the Bill of Rights, of all people physically present in our borders, citizen or not.  Anyone, regardless of citizenship status, may buy property, own a business, or seek employment in the United States without any legal distinction vs. US "citizens"
3. Certain government functions, including voting and holding office, may require formal "citizenship".  Citizenship should be easier to achieve, based mainly on some minimum residency period, and can be denied after this residency only for a few limited reasons (e.g. convicted of a felony).  The government may set no quotas or numerical limits on new citizenships.
4. All people present in the US pay the same taxes in the same way.  A non-citizen or even a short term visitor pays sales taxes on purchases and income taxes on income earned while present in the US just like anyone else.  Immigrants will pay property taxes just like long-term residents, either directly or via their rent payments.
5. Pure government handouts, like Welfare, food stamps, the EITC, farm subsidies, and public housing, will only be available to those with full US citizenship.  Vagrancy and squatting on public or private lands without permission will not be tolerated.
6. Most government services and fee-based activities, including emergency services, public education, transportation, access to public recreation, etc. will be open to all people within the US borders, regardless of citizenship status, assuming relevant fees are paid.
7. Social Security is a tough beast to classify - I would put it in the "Citizen" category as currently structured (but would gladly put it in the "available to everyone" category if SS could be restructured to better match contributions with benefits, as in a private account system).  But, as currently configured, I would propose that only citizens can accrue and receive SS benefits.  To equalize the system, the nearly 8% employee and 8% employer social security contributions will still be paid by non-citizens working in the US, but these funds can be distributed differently.  I would suggest the funds be split 50/50 between state and local governments to offset any disproportionate use of services by new immigrants.  The federal portion could go towards social security solvency, while the state and local portion to things like schools and medical programs.

With this plan, we return to the America of our founding fathers, welcoming all immigrants who are willing to take the risk of coming here.  We would end the failed experiment of turning citizenship from a voting right into a comprehensive license that is required to work, own property, or even associate and be present within the US border.  Since immigrants today who are "illegal" pay no income or social security taxes into the system today (they do pay sales and, via rent, property tax), this plan would increase tax revenues while reducing some welfare state burdens.

I think if you asked many prospective immigrants, they would agree to this deal - no handouts, just a fair chance to make a living and a life.  However, immigrant advocacy organizations are hugely unlikely to accept this plan, as most seem today to have been co-opted by various Marxist organizations who are opposed to anyone opting out of the welfare state (it is no coincidence that the recent immigration policy protests all occurred on May Day, the traditional Soviet-Marxist holiday).

Finally, I would like to offer one thought to all those who worry about "absorbing" ten or fifteen million new immigrants.  First, I would argue that we have adopted many more immigrants than this successfully in this country's history, including my grandparents and probably yours.  Second, I would observe that as recently as the last several decades, we managed to absorb 40 million new workers quite successfully, as I wrote here:

Check this data out, from the BLS:

• In 1968, the unemployment rate was 3.8%.  22.9 million women were employed in non-farm jobs, accounting for 34% of the work force.
• In 2000, the unemployment rate was 4.0%.  62.7 million women were employed in the work force, accounting for 48% of the total
• In these years, the number of women employed increased every single year.  Even in the recession years of 1981-1983 when employment of men dropped by 2.5 million, women gained 400,000 jobs

This is phenomenal.  After years of being stay-at-home moms or whatever, women in America decided it was time to go to work.  This was roughly the equivalent of having 40,000,000 immigrants show up on our shores one day looking for work.  And you know what? The American economy found jobs for all of them, despite oil embargos and stagflation and wars and "outsourcing".

Brian Doherty of Reason observes:

The solution to the legal crisis immigration represents won't come through
immigration law itself, which again and again has proven itself useless at
fully stemming the irresistible tides of human desire for a better life. No
matter how much money is spent or how the law is jiggered, it is not immigration
policy that has created unnecessary tears and strains in America's social
order. Rather, the welfare state is at the root of any legitimate claim that
immigration (legal or illegal) is an assault on the American nation. (There
are plenty of illegitimate complaints, based merely on distaste for
the often-imaginary hell of running into Spanish-speaking people in
day-to-day life or seeing some flag not of your nation, but such complaints
are not worthy of consideration.)...

The free market, as it usually does, has created a system of mutually
satisfactory interdependence, all of us serving each other and helping each
other get what we want. The welfare state, in all its manifestations from
medical care to schooling to pure giveaways, creates a negative sum game in
which resources are forcibly redistributed making some a problem, or a
perceived potential problem, to others, and allowing demagogues to obsess
over precious "public" resources scarfed up by the invading Other.

As long as that system is around to breed resentment and anger"”as well
as counter-resentment and counter-anger such as that seen in the streets of
L.A. of late"”immigration will continue as a political crisis, no matter
how many repeat cycles of jiggering with immigration law, or protesting it,
we go through.

California's
Proposition 187,
attempting to limit the provision of government services to illegal
immigrants, was indeed, whatever the motives of its supporters, in spirit on
the right track to a world where any immigrant ought to be, and can be,
welcome; one where they are pure contributors at the same time to their own
well-being and to everyone else's as well. It's the only permanent and just
solution to the immigration conundrum. But it involves a significant
reduction in federal power, money, and authority, rather than an expansion
of it. Strangely, it's a no-go in today's Washington.

I wrote a similar essay on how the New Deal changed our views on immigration.

I loved this email received at Maggie's Farm:

What are you guys smoking over there? Here I am in Massachusetts,
without health insurance, and with a family of four, and all that has
happened is on top of having to pay full freight for my family's doctor
bills, I get fined $1000.00 for the privelege.

I don't want
your stinking welfare greenstamp department of motor vehicle government
cheese copay paperwork foodstamp prepaid doctor tax charity ward let a
million flowers bloom supervision of my family's medical situation,
thank you very much.

Catastrophic medical insurance is
currently illegal in Massachusetts. All they had to do is allow me to
purchase what I could get if I lived 50 miles west, which is REAL LIVE
INSURANCE, that is, they would pay if something unexpected,
substantial, and expensive happened. And it would cost me a couple
hundred bucks a month. But no, I have to pay full freight for every
lamebrain thing that every knucklehead who has a job with benefits
wants tax free, like gym memberships and aromatherapy and acupuncture
and reiki massage and "mental health," ie, I'm a miserable failure as a
human being and I want to talk to another miserable failure that went
to community college for psychology about it, at great expense. Oh,
yes, let's not forget all middle age men that need free blue pills
because what a mean spirited thing it would be [if] middle age men didn't
wander the earth with extra free hardons.

And so "insurance"
becomes paying in advance for others to get what they don't need or
deserve, to the point where "Insurance" costs 1200 a month and if
something catastrophic did happen, would bankrupt me anyway, because
instead of paying $50 for an office visit for an imaginary ailment, but
having a real catastrophe paid for, the powers that be would prefer
paying $5 dollars copay for an office visit to their yogurt enema
wellness healer, but have to chip in 20% for cancer therapy, which
would bankrupt anybody that has to worry about the cost of health
insurance in the first place.

ROFL. I too am a big believer in catastrophic health insurance.  My home insurance does not cover broken light bulbs and leaky plumbing.  My car insurance does not cover air filters.  Why does my health insurance have to cover routine stuff?  I pay for my own health care and this is exactly how my family handles both dental and medical:  We pay regular visits but have catastrophic coverage for major health breakdowns. 

Jeez, I wish I had written that email and could take credit for it.  The blog does not reveal the emailer's identity, but whoever you are you're welcome to guest blog here any time.

Update: About a year ago, my family of four was quoted about $650 a month for the type of full (not catastrophic) medical insurance that the state of Mass. is requiring.  This is about $8000 a year.  This strikes me as by far the most expensive item that any US government has required its citizens to purchase, and given the average GDP of most nations, may be the most expensive item any government in history has required all of its citizens to purchase.  Up to this point, many municipalities have shied away from requiring purchase of $40 smoke detectors.  The only thing that is even within an order of magnitude of this is perhaps car insurance, but even car insurance is not required of every citizen, just the ones with cars (don't laugh, if car insurance laws followed the same logic as this health insurance bill, not having a car would not be a legal excuse for not having auto insurance.)

Update 2:  I am sure I will get the response, "but the supporters promise that the bill will halve the cost of private health insurance.  Right.  Here is a clue:  Except for the reform plan in California pushed by Gov. Arnold, every single state attempt to "reform" workers comp. has resulted in my premiums going up.  I am sure we are all holding our breath for the price drop in passenger rail service and first class mail. 

This plan removes the last people from the market who are price sensitive shoppers of individual medical services (i.e. those who pay expenses out of pocket rather than having them covered by medical insurance).  If you drive down the marginal cost to all consumers to the level of the copay from the much higher true-cost of the procedure, then you are going to get a lot more use of all medical procedures.  Higher use = higher cost.  Higher cost = higher premiums, even when spread over more people.

I am constantly stunned that this concept has to be explained to people.  Let's consider a test that costs $1000 to administer that can detect a very rare type of cancer that only occurs in 1 in 100,000 people.  Well, if they charged you anywhere near the $1000 cost, few people would choose to pay for a test to identify something so low-risk.  But if you could take the test for a $20 copay?  Sure doc, let's do it!  So the insurance pool has to fork over $1000 for a procedure that you might only value at $20.   Also see this post for more along the same lines.  And here too.

Of the more partisan blogs I read, I have always enjoyed Captains Quarters for being thoughtful and well-written.  Ed Morrissy is clearly as skeptical about open immigration as I am supportive of it, which  I am generally willing to put into the "intelligent people will disagree" category, until I found this bit a little frightening (emphasis added):

As I have written repeatedly over the past two years, we simply cannot
throw out 12 million people overnight, so some sort of guest-worker
program is inevitable, if for no other reason than to get an accurate
accounting of the aliens in our nation. Either that, or we will have to
herd people into concentration camps, a solution that will never pass
political muster even if were remotely possible logistically. That
program could form a basis of a comprehensive immigration "reform", if
properly written.

Is the implication that his only real problems with American concentration camps for people born in Mexico are logistical?  When one typically says that an idea can't pass political muster, they generally are referring (with a wistful sigh) to what they consider a good idea that for whatever reason could not survive the legislative process.  Let's be clear: herding people into concentration camps based arbitrarily on their birth location is abhorrent, not logistically difficult. 

I haven't called myself conservative for over 20 years, but I thought that most good conservatives would agree with the following statement:

"Our fundamental rights, from speech to association to property, are not granted to us by any government, but belong to us as a fact of our human existence."

Do conservatives still believe this?  I know liberals gave up on it a while back - that is why I pay a transaction "privilege" tax in Arizona, which presumes that the ability to conduct commerce is a privilege that is granted by the government.  But I thought conservatives stood by this statement.  But if they still do, then on what basis can they argue that people not born within the US border somehow have lesser (or no) right to conduct commerce in this country, to buy and live in a home in this country, to sell their labor in this country, etc.?   The only rights or activities or privileges a country should be able to deny non-citizens are those rights and privileges that flow from the government and not from our basic humanity.  Which are.... none (update: OK, maybe one: Voting, since this is inherently tied up with government.  I have written before about why I think voting is one of our less important rights).

I understand there are good and valid concerns about government handouts and taxpayer-paid services flowing to recent immigrants, but to solve this narrow concern, "reform" discussion should be about setting minimum qualification standards for such services or handouts, and not about putting Mexicans in concentration camps.

Update:  A number of readers have scolded me for overreacting to the Morrissey quote, arguing that the quote is just dry understatement rather than any revelation of sinister plans.  Fine.  I have friends who are both legal and illegal immigrants her in Phoenix, as well as several who are in-between (i.e. are constantly battling to hang on to their visa status by their fingernails) so I have personal emotions in the game here that may make me overly sensitive.

I will admit to a huge blind spot:  I just cannot comprehend why Americans, none of whose families are native to this land, get so upset about high levels of immigration, beyond the public services issue.  And the more I think about this latter, the more I am convinced making everyone legal combined with some eligibility waiting periods (for voting, welfare, etc) would generate more tax revenue than it would consume.  In fact, high levels of immigration may be the only viable solution to the demographic bomb we have with social security and medicare.  (By the way, the public services issue is one reason the Democrats have, if possible, an even less viable position than Republicans.  Our Democratic governor has publicly supported continuing free government services to illegal immigrants but opposed allowing them to work.  This makes sense, how?)

I do understand there is "law and order" argument that goes "well, those folks are breaking the law, and we have got to have respect for the law."  Here's a proposal.  Everyone who has never knowingly violated the speed limit, never done a rolling stop at a stop sign, and never tried illegal narcotics in college are all welcome to make the argument to me about the need to strictly enforce every law on the books.  This same logic is used to send refugees escaping Cuba back to Cuba, and it sucks. 

From Robert Bidnotto, echoing thoughts I had here and also here, but he writes much more eloquently:

Okay, I have had it.

Not a damned thing distinguishes the Republicans from the Democrats
anymore...not a damned thing. "No Child Left Behind" in essence, and
unconstitutionally, federalized education. The GOP-engineered federal
prescription drug subsidy program for seniors was another huge and
costly step toward total socialized medicine. The Administration's
response to recent natural disasters -- here and abroad -- establishes
the premise of federalizing all local emergencies globally, and  reducing the U.S. military into becoming the logistics wing of the International Red Cross.

And so on, and so on....

To the Left, government should whip individuals into collective
lockstep regarding its PC-egalitarian agenda on such issues as smoking,
diets, guns, cars, nature-worship, land use, political speech and
rhetoric, equality of income and "access" to things that don't belong
to you, drafting kids for "national service," using schools to push PC
propaganda, etc.

To the Right, government should whip individuals into collective
lockstep regarding its traditional moral agenda, including abortion,
sex, Darwin, cultural speech and rhetoric, marriage, national
demographic purity, drafting kids for military service, using schools
to push religious values, etc.

Neither side wants a government of limited powers, and
rejects the initiation of force against others. Neither side respects
individual rights, and rejects using the "fearful" power of government
to compel the independent individual to toe its party line. Neither
side recognizes property rights, and rejects the redistributionist
welfare state.

More fundamentally, neither side rejects the cannibalistic "morality" of sacrificing the individual to the group.

Left and Right both agree that the individual is their private
plaything, a sacrificial lamb for their respective pet causes. The only
thing that they really disagree about is which individuals they are
going to sacrifice, for whose benefit, and in the name of what cause.

Imagine that you are in a budget meeting at your company.  You and a number of other department heads have been called together to make spending cuts due to a cyclical downturn in revenue.  In your department, you have maybe 20 projects being worked on by 10 people, all (both people and projects) of varying quality.   So the boss says "We have to cut 5%, what can you do?"  What do you think her reaction would be if you said "well, the first thing I would have to cut is my best project and I would lay off the best employee in my department". 

If this response seems nuts to you, why do we let politicians get away with this ALL THE TIME?  Every time that politicians are fighting against budget cuts or for a tax increase, they always threaten that the most critical possible services will be cut.  Its always emergency workers that are going to be cut or the Washington Monument that is going to be closed.  Its never the egg license program that has to be cut. 

I am reminded of this in driving long distance this weekend and I picked up, by one of those random late night AM skip-distance things, a station in Colorado, and it was full of commercials threatening dire consequences (old people will go hungry, kids won't get an education, emergency workers won't be there for your heart attack) if voters don't overturn TABOR, which is the tax plan that has, for over a decade, limited tax revenue collections to population growth plus inflation.  When I was in Colorado, I loved TABOR (the Cato institute has a nice article on why you should too) and really loved the tax refunds I often got because of it.

TABOR provides a fairly constant revenue stream to the government, in good times and bad.  When times are good, the government is flush, and when times are bad the government runs short (due to unemployment payments, more welfare, etc.).  Many of us in cyclical businesses deal with this all the time, and seem to be able to cut marginal programs added in good times that we can no longer fund in bad times.  Politicians are incapable of this.  Many businesses also underspend revenues by a wide margin in good times, knowing they will need the reserves in bad times.  Politicians are also incapable of this.

On Tuesday, Colorado voters will decide if they will require Colorado politicians to take the same responsibility for fiscal management that everyone else does in their private business lives, or if they will bail them out of their incompetance with more of their money. 

Going back to my example of suggesting in a budget meeting that you will cut your best programs and people in a budget crisis, would you expect to get more budget or to be fired?  Why can't we do the same with politicians?

Update: Bummer.  Coloradans voted to roll back TABOR.  Glad I don't live there anymore.  Roundup at Hit and Run.

Frequent readers of this blog, all 12 or so of them, are probably tired of my recent obsession with Katrina examples of how government values control over results (posts here, here, here, here, here, and here, lol).  So I will let someone else say it now:

There has been a lot of political and ideological discussions surrounding
Katrina. Clearly the political sector handled the disaster with great
inefficiency. Yet many people, including (as usual) most of the media, seem to
believe government failure somehow proves we need bigger government.

This is an odd conclusion. If the voluntarily sectors (market and civil
society) fail we hardly conclude that government must shrink. To put it another
way, if Katrina had been handled with great efficiency by the state the same
people would conclude this was an argument for even stronger government. But now
the exact opposite is also taken as meaning we need greater government. I am
curious to know if there is any world development the NYT does not see as
evidence for expanding the welfare state, at the expense of individuals and of
the civil society.

There is much more, from Truck and Barter.

Those of you who wanted a strong federal welfare-nanny-state response to New Orleans, you have got your wish:

It is impossible to over-emphasize the extent to which this area is
under government occupation, and portions of it under
government-enforced lockdown. Police cars rule the streets. They (along
with Humvees, ambulances, fire apparatus, FEMA trucks and all
official-looking SUVs) are generally not stopped at checkpoints and
roadblocks. All other vehicles are subject to long lines and snap
judgments and must PROVE they have vital business inside the vast
roped-off regions here. If we did not have the services of an off-duty
law enforcement officer, we could not do our jobs in the course of a
work day and get back in time to put together the broadcast and get on
the air.

This is not poor federal management - this is exactly-what-you-always-get federal management.  Putting a premium on control and process over results is built into their DNA.  My prediction is that those areas outside federal control and allowed to be accessible to private aid and to individuals who want to, yeah I know its crazy, come into the area and take responsibility for fixing their own house rather than waiting for the feds to do it for them will fair much better in the long run.  More on the federal urge for technocratic control here  and here and here and here.

Something about this reminds me of an observation made over and over in interviews with American soldiers from WWII.  They recounted that in German villages, after a battle, the German citizens were out in the streets, starting to clean up and rebuild before the dust had even settled, while in France, villagers would just sit forlornly in the debris and wait for someone to come do something about it.

Update:  I know you are getting tired of these stories, but here is yet another example of the FEMA folks opposing private relief efforts in the name of "control". 

Starting right after midnight I began receiving calls from FEMA, HHS,
TRANSCOM and other groups whose acronyms I still cannot explain.  LCDR
Kennedy from FEMA called to understand what I was trying to do.  I told
him.  Fifteen minutes later Mimi Riley, Deputy Director from NDMS
called to beg me in a plaintive and exhausted voice not to carry out
this mission.  She had many reasons "“ you need doctors on the plane,
Chicago is too far from their home, how will we track the patients,
this is a military operation and we were not military. 

I
explained to her that we had two doctors on the plane one of whom was a
retired Air Force Doctor who had run the military hospital in Baghdad
after the invasion.  I thought we could trust him to run an airplane of
people from New Orleans to Knoxville.  We were working with NDMS
hospitals in Tennessee and Chicago so they would have a good tracking
system.  (I guess Mimi never heard of the Great Migration of African
Americans from New Orleans and the south to Chicago after the flood of
1927 and during the Depression.  Many people from New Orleans are more
at home in Chicago than Houston. )

Mimi was unmovable.  We
were not military and that was that.  She tried to sound grateful for
our intentions but she was not going to have outsiders help.  I even
offered to GIVE her the planes and the crews and the hospitals and let
her run it through her NDMS system but she would have none of it.  She
asked me at least to delay until noon the next day and I said I would
try.

A good revamp of FEMA after this is all over would put a heavy emphasis on private action and FEMA's role in aiding rather than controlling and limiting this effort.  Unfortunately, I don't expect that to be the outcome.  I fear that large government technocrats and lefties who are always suspicious of private bottom-up action will control the agenda in framing the FEMA debate.

OOPS:  Did I say that technocrats and lefties distrusted anything but top-down federal power.  I forgot the righties as well (from dubya's speech the other day):

It is now clear that a challenge on this scale requires greater federal
authority and a broader role for the armed forces -- the institution of
our government most capable of massive logistical operations on a
moment's notice.

Sounds like Lyndon Johnson and the Great Society.  As a libertarian, I dread the next election.  Two parties competing to see who can enhance federal power more.  Blech.

Yet another:

The patients and staff at Methodist could have been evacuated before
Hurricane Katrina hit. But instead they were condemned to several days of fear
and agony by bad decision-making in Louisiana and the chaotic ineptitude of the
Federal Emergency Management Agency. Some of the patients died.

Incredibly, when the out-of-state corporate owners of the hospital responded
to the flooding by sending emergency relief supplies, they were confiscated at
the airport by FEMA and sent elsewhere.

As I have written before, one of the favorite past-times of local and state politicians is to hand out grants, subsidies, and tax breaks for businesses to relocate to their district.  Billions and billions of dollars are given out every year to everyone from movie producers to sports teams to Wal-marts in order to "bring jobs" to the local community.

Economists have argued for years that these subsidies are a total waste (more on this below) but the Club for Growth links a great article demonstrating that they are not only a waste, they also are downright fraudulent.

Gov. George Pataki's administration gives millions of dollars every year to businesses that promise to hire more people or retain jobs. It's a promise that is often broken.

Almost half of those companies helped by New York taxpayers fell short of the job targets that are part of their deals with the state, records show.

In fact, a quarter of the businesses took taxpayers' money and loans, then cut jobs.

The article is quite detailed, but here is one example:

Take the case of Ingram Micro, a global computer-parts wholesaler with a distribution center near Buffalo.

In 1999, it accepted $675,000 in taxpayers' money and promised to add 542 workers. Instead, it cut its workforce by nearly 400.

The state demanded a penalty of $176,985, but an Ingram spokesman said it has not paid and is negotiating with the state.

Last month, Ingram Micro announced it will lay off another 120 Buffalo workers and send the work overseas.

OOPS!  One is driven to ask the obvious question - why are these subsidy programs so popular?  I can think of at least three explanations.

The first explanation is political.  These subsidy programs tend to satisfy important bases from both political parties, thereby ensuring their bipartisan support.  Democrats like the idea of spending government money to create jobs, while Republicans like tax breaks and supporting business.  This explanation is unsatisfying.

The second explanation probably hits closer to the mark, and it is the cynical-political explanation that politicians like buying votes with other people's money.  When they campaign for re-election, politicians like to have a couple of "scalps" they can wave around to show the voters that they are doing something (a consistent history of sober fiscal responsibility seems to be unappealing, I guess).  Being able to say "I brought Microsoft to the town of West Nowheresville" or better yet "I brought 1000 jobs to this community" are political favorites of both parties (Here is what New Yorkers are really paying for - the ability of George Pataki to post on his web site a press release saying "Bedding Company to Create 240 New Jobs in New Baltimore").   These are priceless campaign slogans that didn't cost the politician a dime, since they were funded by taxpayers.

The third explanation comes from economics and is the most interesting.  If you shed any notion of morality or ethics (e.g. that one has no right to give one person's money to another just to make their re-election more likely) then politicians who are approached by a company looking for a handout for business relocation faces what is called the prisoner's dilemma.  Many of you may know what that is, but for those who don't, here is a quick explanation, via the Stanford Encyclopedia of Philosophy:

Tanya and Cinque have been arrested for robbing the Hibernia Savings Bank and placed in separate isolation cells. Both care much more about their personal freedom than about the welfare of their accomplice. A clever prosecutor makes the following offer to each. "You may choose to confess or remain silent. If you confess and your accomplice remains silent I will drop all charges against you and use your testimony to ensure that your accomplice does serious time. Likewise, if your accomplice confesses while you remain silent, they will go free while you do the time. If you both confess I get two convictions, but I'll see to it that you both get early parole.  If you both remain silent, I'll have to settle for token sentences on firearms possession charges. If you wish to confess, you must leave a note with the jailer before my return tomorrow morning."

The "dilemma" faced by the prisoners here is that, whatever the other does, each is better off confessing than remaining silent. But the outcome obtained when both confess is worse for each than the outcome they would have obtained had both remained silent.

I hope you can see the parallel to subsidizing business relocations (replace prisoner with "governor" and confess with "subsidize").  In a libertarian world where politicians all just say no to subsidizing businesses, then businesses would end up reasonably evenly distributed across the country (due to labor markets, distribution requirements, etc.) and taxpayers would not be paying any subsidies.  However, because politicians fear that their community will lose if they don't play the subsidy game like everyone else (the equivalent of staying silent while your partner is ratting you out in prison) what we end up with is still having businesses reasonably evenly distributed across the country, but with massive subsidies in place.

To see this clearer, lets take the example of Major League Baseball (MLB).  We all know that cities and states have been massively subsidizing new baseball stadiums for billionaire team owners.  Lets for a minute say this never happened - that somehow, the mayors of the 50 largest cities got together in 1960 and made a no-stadium-subsidy pledge.  First, would MLB still exist?  Sure!  Teams like the Giants have proven that baseball can work financially in a private park, and baseball thrived for years with private parks.  OK, would baseball be in the same cities?  Well, without subsidies, baseball would be in the largest cities, like New York and LA and Chicago, which is exactly where they are now.  The odd city here or there might be different, e.g. Tampa Bay might never have gotten a team, but that would in retrospect have been a good thing.

The net effect in baseball is the same as it is in every other industry:  Relocation subsidies, when everyone is playing the game, do nothing to substantially affect the location of jobs and businesses, but rather just transfer taxpayer money to business owners and workers.

This subsidy game reminds me of the line at the end of the movie Wargames:

A strange game.  The only winning move is not to play.

Postscript:  As a libertarian, I have gone through phases on targeted tax breaks. There have been times in my life when I have supported tax breaks of any kind to any person for any reason, by the logic that any reduction in taxation is a good thing.  I know there are many libertarians that take this position.  Over time, I have changed my mind.  First, targeted tax breaks seldom in practice reduce the overall tax burden - they tend to be made up somewhere else.  Second, these tax breaks tend to be gross examples of the kind of government coercive technocratic meddling in commerce and individual decision-making that I despise. Almost always, they are trying to get individuals to do something they would not otherwise do, so in practice they tend to be distorting and carry all kinds of unintended consequences (as well as being philosophically repugnant).

Update 9/29/05:  We are suddenly getting a bunch of visitors from Econ.Aplia.com, which I presume is related to a university assignment or blog post somewhere.  Can someone email me in at the email in the right bar if folks are coming here from a particular site or university.  Just curious.

Update 9/30/05:  Thanks to a couple of emailers, the cat (err, bulldog?) is out of the bag and I know that Yalies are in the house.  Welcome.  I don't know if they teach free-markets any more in college, but your welcome to look around and take a walk on the libertarian dark side.  Good luck with economics, even if you did pick the wrong school.  --Coyote, Princeton '84, Harvard MBA '89

Update Again:  By the way, I discuss here the odd issue of why I and so many people misspell "dilemma" as "dilemna", as I did in this post.

In my post on "Respecting Individual Decision-Making",  which to-date I consider my favorite post, I wrote:

As a capitalist and believer in individual rights, one of the things
I notice a lot today is just how many people do not trust individual
decision-making.  Now, I do not mean that they criticize other people's
decisions or disagree with them -- in a free society, you can disagree
with anybody about anything.  I mean that they distrust other people's
free, private decision-making so much that they want the government to
intervene.

Interestingly, most people don't think of themselves as advocating
government interference with people's private decisions.  However, if
you ask them the right questions, you will find that they tend to fall
into one of several categories that all want the government to
intervene in individual decision-making in some way:  nannies,
moralists, technocrats, and progressive/socialists.  Though the
categories tend to overlap, they are useful in thinking about some of
the reasons people want to call in the government to take over parts of
people's lives.

I then spent a lot of time with examples from each category.  On Sunday, Keith Thompson in the San Francisco Chronicle (of all places) wrote an article about his disaffection with the left, which said in part:

A certain
misplaced loyalty kept me from grasping that a view of individuals as morally
capable of and responsible for making the principle decisions that shape their
lives is decisively at odds with the contemporary left's entrance-level view
of people as passive and helpless victims of powerful external forces, hence
political wards who require the continuous shepherding of caretaker elites.

I'm not sure that he and I are in exactly the same place, but we are both looking for allies who are consistent in their defense of classical liberal values and individual rights.

In a related post, Mickey Kaus, who I seldom read because he spends more time than I care on inside-the-beltway political tactics and media stuff, has an interesting related post about the left and trusting people to do right by their own lives.  Kaus resists permalinks, but the gist is:

Two good critiques of the ubiquitous, left-pleasing menace, George Lakoff--by Marc Cooper and Noam Scheiber. Oddly, neither attacks Lakoff at what would seem to be his central weak point, namely his conflation of politics and parenting--identifying "conservative" values with "the strict father" and "liberal" values with the "nurturant parent."

Is a country really like a family? Isn't that an idea with a ... checkered
history? A family is a relationship between inherently unequal,
not-completely-free people--parents and children. A country, at least
in one American conception, is the relationship of equal, autonomous
people. Using the family as the template for politics stacks the deck against social equality (the value I'd suggest as the liberal touchstone). For one thing, it lends itself all too easily to the condescending liberal notion of compassion,
an anti-populist idea if there ever was one. It's also horribly
misleading as a guide to practical policies--no wonder that when
Scheiber asks Lakoff about President Clinton's welfare reform, Lakoff
responds "Why did he have to do that? ... I still don't understand it
fully." In Lakoff's mind, Clinton wasn't changing the welfare system,
he was beating his family's children! Aren't there values that aren't
family values?

A good example of that in recent debate has been social security.  As I argued before:

Advocates for keeping forced savings programs like Social Security in
place as-is by necessity argue that the average American is too stupid,
too short-sighted, and/or too lazy to save for retirement without the
government forcing them.  Basically the argument is that we
are smarter than you, and we are going to take control of aspects of
your life that we think we can manage better than you can.  You are
too stupid to save for retirement, too stupid to stop eating fatty
foods, too stupid to wear a seat belt, and/or too stupid to accept
employment on the right terms -- so we will take control of these
decisions for you, whether you like it or not.  For lack of a better
word, I call this intellectual welfare.

Given these fairly accurate descriptions of the state of liberalism in America, it is ironic that several weeks ago, Kevin Drum made the following observation:

Whenever I talk about the underlying principles that should guide liberals, as
I did a couple of days ago, one of the ideas that always pops up is privacy
rights. In fact, it comes up so often that it strikes me that we're missing a
bet by not making a bigger deal out of it.

The reason, Mr. Drum, is that a true privacy right defined as you are considering it (in particular, one defined broadly enough to give women an absolute right to abortion) would undermine much of the left's statist agenda.   A true privacy right would force the government to respect individual free decision-making, and require that the government allow individuals to make what elites might consider are bad decisions for themselves. 

Does the Left really want broad privacy rights, or just a constitutional justification for abortion?  If they really want a general primacy of a woman's decision-making over their bodies, why do they support abortion yet oppose letting women choose breast augmentation or the use of Vioxx?  Why do the same leftist politicians that oppose parental approval or even notification for teenage abortion simultaneously support requiring parental permissions for teenagers to use tanning salons?  Why do they resist random searches for terrorists but support such searches to enforce seat belt laws?

As I wrote here,

A true privacy right would allow us complete freedom over who we sleep
with, what we do with our bodies, where we work, and what we pay for
goods.  And, not incidentally, how we choose to invest for our
retirement.  Both parties want the government to control parts of our
lives, so don't expect either Conservatives or liberals to be pushing
the privacy issue very hard.

The government is not our parent, not our boss, not our priest, and not our partner.  It is our servant.  Unfortunately, a large element behind creeping statism in this country is a desire by both left and right to "correct" individual decision-making, even when those decisions affect no one but the actor himself.

Frequent readers will know that I have little patience with the argument against private Social Security accounts that goes something like "Americans are too dumb to be trusted with their own retirement funds".  Today, however, I am going to put that aside for perhaps a better question:

Can the government be trusted with our retirement funds?

This is the argument made by Brad DeLong and quoted in Marginal Revolution:

We need to raise our national savings rate. But if we just raise Social Security
taxes, Congress will treat these taxes as general revenue and spend them. Only
by funneling Social Security contributions into some vehicle that Congressional
representatives cannot interpret as a resource available to fund current
spending can we raise the national savings rate. And private accounts are the
best vehicle we can find to (a) accumulate contributions without (b) allowing
Congressional representatives to seize them as resources available to fund
current federal spending.

Congress has taken all the savings surpluses built up by Social Security over the past decades and it has spent them.  Republicans have spent the money.  Democrats have spent the money.  It is gone, spent on cruise missiles and welfare moms and ethanol subsidies and PBS broadcasts and snail darter studies.  No matter what verbal acrobatics people try to engage in to argue that there is a real "trust fund", the fact of the matter is that all that is in the Social Security till are IOU's that can only be redeemed by raising taxes. 

The situation with Social Security is entirely equivalent to having invested your money in a mutual fund and only later finding the directors of the fund spent your money on themeselves rather than investing it in redeemable securities.  The only differences are that:

• The proprietors of that bogus mutual fund may go to jail, but Congress won't
• Congress can raise taxes to get the money to bail themselves out of their malfeasance

Think of it this way: 

• There were more real assets of value remaining in Enron in its bankruptcy to divide up among investors and creditors than remain in the Social Security "trust fund" to divide up among program contributors.
• There were more real assets of value remaining in the Teamsters retirement fund after years of being raped by organized crime than remain in the Social Security "trust fund"

Stop handing over our savings to such unsavory racketeers (ie. Congress).  We certainly can't do a worse job for ourselves.