Coyote Blog

Revisionism on the causes of WWI seems to ebb and flow like a 20-year clock.  It was Germany's fault, no it wasn't, yes it was.  Etc.  Here is the latest iteration.

I have read quite a bit on the topic of late.  It was horribly complex, but here are a few thoughts.

• At some level, it was everyone's fault, at least as measured by the enthusiasm that greeted the war in nearly every country.  It was the last war begun by folks who thought it would be incredibly romantic and glorious.
• Austria simply has to bear a lot of the blame.  No doubt a crisis in the Balkans could have been started by Russia or Serbia, and in an alternative universe where the Archduke was not assassinated, they might well have.  But the fact is that Austria made this one happen.  They crafted a set of demands on Serbia that were supposed to be unreasonable.  They were meant to be a Casus Belli.  Austria had determined it was going to war with Serbia.
• Much is made of the German blank check to Austria, but the key fact for me were the actions of Germany several weeks later.  In response to a building crisis in the Balkans to their southeast, the Germans entered the war attacking to the northwest, into Belgium and France.  With conflict inevitable in the Balkans, the Germans (with a helping hand from the Russians) helped turn a limited conflict into a World War.

The Germans were also responsible through bad decisions in bringing the US into the war, via a u-boat campaign that failed to achieve its goals (starve the Brits) but managed to bring US troops to Europe at almost the exact moment when British and French troops might have collapsed.  Incredibly, the Germans made the exact same mistake in WWII, declaring war on the US so they could initiate a u-boat campaign against US shipping, when Congress might well have been happy to keep America's war limited to Japan.

I have been taking a course in World War I, something I know little about relative to the rest of the 20th century.

We often think of WWI as a horrible, wasteful, pointless war that solved nothing and WWII as an expensive yet "good" war that achieved positive aims.  But as we approach the 75th anniversary of the Munich conference, it is interesting to note that if you ask someone in Eastern Europe, you are likely to get the opposite answer.  Most Eastern European countries can date their modern statehood from the end of WWI, while WWII led to 50+ years of Soviet subjugation.  WWI was their good war.

Obama, accompanied by the usual chorus on the Left including Kevin Drum, is yet again trumpeting infrastructure spending as a partial economic solution for what ails us, in part based on a McKinsey Global Institute report.   Infrastructure is like education (the other half of the Obama "plan") -- it's hard to find anyone against it per se, it is easy to find examples of it failing, and it is really hard to craft programs at the Federal level that really improve anything.

Having been inside the McKinsey sausage factor for five years, I was loath to just accept their conclusion without seeing the data, so I read the section of the report on infrastructure.  Having read the report, I still don't see how they got to the under-funding number.  Some of the evidence is laughably biased, such as pronouncements from the American Society of Civil Engineers, who clearly would be thrilled with more government infrastructure spending.  The rest comes from something called the world economic forum, but I simply don't have the energy right now to follow the pea any further.

I had two reactions to this plan:

1. Presumably what infrastructure projects we choose matters, so how can we have any confidence (given things like our green energy investment program) that these investments will be chosen wisely and not based on political expediency?
2. From my experience, and also from the McKinsey numbers, most of the infrastructure needs are refurbishment and replacement of existing infrastructure, rather than new infrastructure.  But politicians are typically loath to make these kind of investments, preferring to offer new toys to voters rather than saying all that money was spent just to keep their existing toys.  Just look at the DC metro system, which is still pursuing expensive expansion plans at the same time it refuses to perform capital maintenance and replacement on its current crumbling infrastructure.  Or look at Detroit which is falling apart but still wants to spend $400 million on a new hockey rink.

I was pleasantly surprised that McKinsey actually raised both of these issues as critical.  To the point about project selection:

To effectively deploy additional investment in infrastructure, the United States will have to improve its performance on project election, timely delivery and execution, and maintenance and renewal. This could raise the overall productivity of US infrastructure by as much as 40 percent and generate more economic impact for every dollar spent. And there is added pressure to raise infrastructure productivity today: as commodity prices rise, input costs are going up as well. In extreme circumstances, this can even lead to spot shortages of asphalt and other critical materials, making productive use of such assets even more important.

One of the most effective ways to make infrastructure investment more productive is to choose the right mix of projects from the outset. Too often, the primary approval criteria for project selection in the United States are political support and visibility rather than comprehensive cost-benefit analysis.129 Even when economic analysis is used, it is not always rigorous, or it may be disregarded in actual decision making. When state and local governments choose sub-optimal projects, the cost of financing rises, so focusing on those projects with the clearest returns is a crucial part of taking a more cost-effective approach for the nation as a whole.

In addition, planners at all levels of US government tend to have a bias toward addressing congestion and bottlenecks by building new capacity. But rather than immediately jumping to build new infrastructure projects to solve problems,
planners and project sponsors might first consider refurbishing existing assets or using technology to get more out of them. (See “Better maintenance, optimization, and demand management can extend the life of existing infrastructure assets” later in this chapter.)

The McKinsey study is not arguing for Keynesian digging holes and filling them in again.   They are arguing for infrastructure spending but only if it is better targeted than such programs have been in the past.   Anything about this Administration (or any other Administration, really) that gives you confidence this will happen?

In fact, they argue that a large reason for under-developed infrastructure is not the spending level per se but the insanely inefficient way in which government spends the money

Delays and cost overruns are a familiar refrain in infrastructure projects. Boston’s Big Dig, for example, remains the costliest highway project in US history and was plagued by years of delay and shoddy construction. Originally estimated at $2.6 billion, it now has a final price tag estimated by the Massachusetts Department of Transportation at $24.3 billion, including interest on borrowing. More recently, the San Francisco–Oakland Bay Bridge is being completed almost a decade late, and its original budget of $1.3 billion has grown to more than $6 billion.

Finally, their recommendation focuses more on maintenance and the prosaic, rather than expensive sexy headline grabbing investments (cough California high speed rail cough) that politicians prefer

Another major strategy for increasing infrastructure productivity involves maximizing the life span and capacity of existing assets. In many cases, directing more resources to these areas may be a more cost-effective choice for policy makers than new build-outs.

First, there is a need to focus more attention on maintenance, refurbishment, and renewal. This is an increasingly urgent issue for the nation’s aging water infrastructure, much of which was built in the years immediately after World War II; some of the nation’s oldest pipe systems are now more than a century old. Even more recent water treatment plants will need refurbishment: many built in the
1970s after passage of the Clean Water Act will soon require rehabilitation or replacement. Proactive maintenance to upgrade and extend the life of these aging systems is becoming a more urgent priority.

The study uses a GDP multiplier of 1.77 for infrastructure spending, which explains why their claimed GDP impacts are so high.  Using this kind of chicked-in-every-pot high multiplier will of course make infrastructure spending seem like a no-brainer.  Of course those of us with more sympathy towards Austrian economics, wherein recessions are caused by misallocations of capital, will worry that this kind of government spending program, shifting private resources to public decision makers to spend, will only double down on the same crap that caused the recession in the first place.  I grew up with Japan's MITI being praised as a model by the American Left, watched the lost decades that followed this government-directed investment program, and believe that a similar reckoning is coming in China.

I have bought numerous audio and video Teaching Company courses and have never been disappointed.  Until tomorrow they are having a 70% off sale on many of their courses.

A few I have heard and would recommend:

History of the US

History of London

Big History

American Civil War

Chinese History

Modern Western Civ (I am doing this one now)

Early Middle Ages (one of three by same professor on the Middle Ages.  All three are awesome)  here is late Middle Ages

History of Ancient Rome (not rated as well on this site but this is probably my favorite)

World War I

World War II

I am kind of amazed how long the list is, but I have actually listened to several others I would not recommend or that are not on sale.

Update: Use coupon code VFRC to get an additional $20 if you spend over $50.  By the way, I don't get any commissions.  I just believe in the product.

Several people sent me this Reason video on light rail in Detroit

I was really struck by the cargo cult reasoning here and the confusion of cause and effect.  Because we see rail in highly developed urban areas (e.g. Manhattan) then if we build rail in a blighted area, it will soon look like Manhattan.

Note the mentions of serving sports stadiums.  As I have observed earlier, light rail systems almost always service professional sports stadiums.  Is there no limit to the public subsidies that politicians are willing to throw at sports franchise owners?

Then ending is a classic

Update: From Wikipedia, for those not familiar with cargo cults:

Cargo cult activity in the Pacific region increased significantly during and immediately after World War II, when the residents of these regions observed the Japanese and American combatants bringing in large amounts of material. When the war ended, the military bases closed and the flow of goods and materials ceased. In an attempt to attract further deliveries of goods, followers of the cults engaged in ritualistic practices such as building crude imitation landing strips, aircraft and radio equipment, and mimicking the behaviour that they had observed of the military personnel operating them.

Sure sounds a lot like Detroit, trying to bring back the prosperity.  This is actually pretty endemic in modern-day policy making, as so few people really understand the origins of wealth.  Obama's stimulus programs can be seen in the same light, as cargo cult economics.

Apparently, legislators in California can't get away with just passing a law that says something like "no damn foreigners can build trains for us."  So they repackage their protectionism by finding a way to disguise it, in this case with a truly screwball piece of fiddling-while-Rome-burns legislation:

A bill authored by Assemblymember Bob Blumenfield (D "“ San Fernando Valley) requiring companies seeking contracts to build California's High Speed Rail system to disclose their involvement in deportations to concentration camps during World War II gained final approval from the state legislature today. AB 619, the Holocaust Survivor Responsibility Act, passed the Assembly on a vote of 50 "“ 7 and was sent to the governor, who will have until September 30 to act on it.AB 619 would require companies seeking to be awarded high speed rail contracts to publicly disclose whether they had a direct role in transporting persons to concentration camps, and provide a description of any remedial action or restitution they have made to survivors, or families of victims. The bill requires the High Speed Rail Authority to include a company's disclosure as part of the contract award process.

Apparently they have in mind specifically the SNCF, the French national railroad.  Its loony enough to blame current corporate management and ownership for something the entity did three generations ago, but the supposed crimes of the SNCF occurred when France was occupied by the Nazis.   Its like criticizing the actions of a hostage.  And even if there were some willing collaborationists, they almost certainly were punished by the French after liberation, and besides the US Army Air Force did its level best to bomb the SNCF's infrastructure back into the stone age, so I am certainly willing to call it quits.

For years I have said that daylight savings time likely made no sense as an energy saving program.  It was first used back in World War I, when electricity demand was primarily driven by illumination.  At that time, shifting the clock around to better match working hours with sunny hours (ie times with natural light) probably did save electricity.  But today, electricity demands are driven much more heating and cooling.  The same logic no longer holds.  In Arizona, the earlier the sun goes down, the less electricity we have to use when we are home in the evenings to keep the house cool.

It seems that research has confirmed my gut feel:

The result of the study showed that electricity use went up in the counties adopting daylight saving time in 2006, costing $8.6 million more in household electricity bills. The conclusion reached by Kotchen and Grant was that while the lighting costs were reduced in the afternoons by daylight saving, the greater heating costs in the mornings, and more use of air-conditioners on hot afternoons more than offset these savings. Kotchen said the results were more "clear and unambiguous" than results in any other paper he had presented.

Of course, daylight savings time will never go away, because modern environmentalism has become more a matter of making empty feel-good gestures than performing rational acts that actually improve something.

Via Matt Welch, from the USA Today:

The measure contains funding for a new destroyer and 10 C-17 cargo planes that the Pentagon did not ask for. It also includes hundreds of smaller earmarks for projects of special interest to individual lawmakers, among them $25 million for a World War II museum in New Orleans and $20 million for the Edward M. Kennedy Institute for the United States Senate in Boston, a kind of think tank dedicated to the legacy of the late senator.

Maybe its not as bad as it sounds.  Maybe its just a driving school.

The Europeans have crafted a regulatory environment in their labor market that grants all kinds of protections and gauranteed benefits at the expense of new or unskilled workers trying to join the workforce.  We are doing the same thing:

This year, it's harder than ever for teens to find a summer job. Researchers at Northeastern University
described summer 2007 as "the worst in post-World War II history" for
teen summer employment, and those same researchers say that 2008 is
poised to be "even worse."

According to their data, only about
one-third of Americans 16 to 19 years old will have a job this summer,
and vulnerable low-income and minority teens are going to fare even
worse.

The percentage of teens classified as "unemployed""”those
who are actively seeking a job but can't get one"”is more than three
times higher than the national unemployment rate, according to the most
recent Department of Labor statistics.

One of the prime reasons
for this drastic employment drought is the mandated wage hikes that
policymakers have forced down the throats of local businesses. Economic
research has shown time and again that increasing the minimum wage
destroys jobs for low-skilled workers while doing little to address
poverty.

According to economist David Neumark of the University of California at Irvine,
for every 10 percent increase in the minimum wage, employment for high
school dropouts and young black adults and teenagers falls by 8.5
percent. In the past 11 months alone, the United States' minimum wage has increased by more than twice that amount.

Outside of trade policy and climate treaties, I very seldom discuss foreign policy.  First, because it is not my first interest.  Second, because I am not an expert and do not spend the time to keep myself sufficiently informed on the issues to have useful insights.  Third, because of exactly this problem stated so well my Megan McArdle:

I periodically flirt with isolationism, or if you prefer,
"non-intervention". Like most libertarians, I'm attracted to "high
concept" political philosophy: simple rules that can be stated in a
sentence or less. No arguments about causus belli, blowback, or
ultimately unknowable political ramifications; just a simple "yes or
no" test. Did a foreign army invade the United States? For "Yes", press
one; for "No", press two, and go back to arguing about what should
replace child welfare laws in the coming anarcho-capitalist society.

Besides, all the foreigners hate having us there. Why not leave, and
see if absence makes the heart grow fonder? (I suspect that many
nations which have come, over long decades, to regard regional peace as
some sort of natural law, will get a rather nasty surprise. This might
make our influence look, in retrospect, rather appealing.)

But anyone who thinks at all seriously about libertarianism will,
fairly early on, be faced with a very high hurdle. There are a handful
of wars in which American intervention unambiguously halted gross
abuses of human liberty. World War II is one, though many end up going
around, rather than over . . . arguing that the Nazis were the direct
result of American intervention in World War I; or that it was
justified because Japan attacked us¹; or that Russia and Britain would have defeated Hitler anyway².  The American Civil War, however, is by far the highest leap; and the hardest to dodge.

In theory, every state has the right to secede, and the stated
Federal rationale for the Civil War--preserving the union--was the
vilest tyranny. In practice, chattel slavery was a barbarism even
viler.

And so we killed 20-30% of the Confederate Army, not a few of our
own, and uncounted numbers of civilians. That's not counting the
wounded, who probably outnumbered the dead. All we managed to achieve,
at this horrendous cost, was a corrupt and brutal occupation, followed
by the "freedom" of Jim Crow, sharecropping, and "separate but equal". And it was worth it.
The good guys won. We didn't do everything we wanted to, or even
everything we could have, or should have. Jim Crow was putrid. But it
was nonetheless so much better than slavery that it was worth the
horrendous cost--in my opinion, and that of almost everyone in the
world.

For me, a big part of the problem is one of information -- generally, most of the information one might find useful in deciding if X is a good war to pursue is from the government, an institution that demonstrably cannot be trusted based on past history when it makes this case.  Non-interventionism seems the right way to go, except for the
(relatively few) times it is not.  The problems is, to paraphrase the
famous dictum about advertising money, "half (or more) of our wars are
a waste -- we just don't know in advance which half."  Megan uses the
example of the Civil War, saying that that war was worth it because we
got rid of slavery.  But the war by no means began that way.  It wasn't
really until well into the war that both sides were pretty much in
agreement that the war was about ending or retaining slavery. I would argue that in advance, that war looked like an awful, terrible, horrible proposition.  The initial value proposition was "let's go to war so the Feds can have a bigger empire to run."  Only later did it become, "let's go to war to free a large part of our population."  There was a female professor, I forget her name, who made the point that the Emancipation Proclamation changed the war from a bloody waste of time to a moral positive.  But that came years into the fight.

The other problem I have is that the war is fought by, well, the government, the institution for which I have no trust.  One way of thinking about it is that every time we go to war, we put our lives and treasure and very future as a country in the hands of the Post Office.  Eeek.

Tom Kirkendall observes that this could have been written about Houston light rail.  I would add that it also could have easily been written about Phoenix light rail, which I have criticized here and here and here.  And heavy rail? Don't get me started.

Beyond these impressions, Tom Rubin observes that VTA has "the worst
operating statistics fo any American transit operator." The reason for
this, he says, is that San Jose "” being built mostly after World War II
"” is one of the most spread-out urban areas in the country. Not only
are people spread out, but jobs are spread out, with no job
concentrations anywhere.

This makes large buses particularly unsuitable for transit because
there is no place where large numbers of people want to go. So what was
VTA's solution when its bus numbers were low relative to other transit
agencies? Build light rail "” in other words, use an expensive
technology that requires even more job concentrations.

Now it has one of the, if not the, poorest-patronized light-rail
systems in America. So what is its solution? Build heavy rail, a
technology that requires even more job concentrations.

This is an interesting factoid from another Anti-Planner post:

The amazing thing to the Antiplanner is that anyone would take this
proposal seriously. The average urban freeway lane costs about $10
million per mile. The average light-rail line costs about $50 million
per mile and carries only a fifth as many people. Seattle's proposed
lines were going to cost $250 million per mile, making then 125 times
more expensive at moving people than a freeway lane.

My friend Brink Lindsey is usually pretty measured in his writing.  So it was entertaining to see him take Paul Krugman out to the woodshed:

How can someone as intelligent and informed as Krugman
concoct an interpretation of the post-World War II era that does such
violence to the facts? How can someone so familiar with the intricate
complexities of social processes convince himself that history is a
simple matter of good guys versus bad guys? Because, for whatever
reason, he has swapped disinterested analysis and scholarship for
ideological partisanship. Here,
in a revealing choice of phrase, he paraphrases Barry Goldwater's
notorious line: "Partisanship in the defense of liberty is no vice."

To be a partisan is, by definition, to see the world partially
rather than objectively: to identify wholeheartedly with the
perspectives of one particular group and, at the extreme, to discount
all rival perspectives as symptoms of intellectual or moral corruption.
And the perspective Krugman has chosen to identify with is the
philosophically incoherent, historically contingent grab bag of
intellectual, interest group, and regional perspectives known as
postwar American liberalism.

Of course, over the period that Krugman is addressing, the contents
of that grab bag have changed fairly dramatically: from
internationalist hawkishness in World War II and the early Cold War to
a profound discomfort with American power in the '70s and '80s to a
jumble of rival views today; from cynical acquiescence in Jim Crow to
heroic embrace of the civil rights movement to the excesses of identity
group politics to a more centrist line today; from sympathy for
working-class economic hardship to hostility to working-class culture
and back again. Yet with a naive zeal that leaves even Cuomo visibly
nonplussed at several points in the interview, Krugman embraces the
shifting contents of this grab bag as the one true path of virtue.

I have written on a number of occasions that the real problem in American health care is the insulation between the person who receives the services and the true cost of the services.  Other than a few folks like me with high deductible policies, there is no incentive to shop around and no incentive to eschew certain avoidable and high cost procedures.

Marc Cooper complained that he went to the hospital for a day and it ended up costing the insurance company over $100,000.  His take-away form this is that the government needs to step in.  My take-away was different:

Did he ask for a price estimate in advance? Did he ask, as most of
us do with all of our large purchases, for a written estimate or
quotation? Did he get such estimates from two or three competitors? Did
he shop around?

Of course not! Because in a system where someone else is paying the
bills, we have no incentive to shop around. So providers have no
incentive to compete on price or to worry about productivity and cost
control.

Sure, this looks like a rip-off.  But if you went in to buy a car,
concerned only with the quality of the
car, and never asked the price and then got a bill for $100,000 a few
weeks later, would you be surprised?  Would anyone give you sympathy if
you complained you paid $100,000 for the car but admitted you never
asked what the price was?

So I was very pleased to see this from John Stossel:

America's health-care problem is not that some people lack insurance, it is that 250 million Americans do have it.

You have to understand something right from the start. We Americans
got hooked on health insurance because the government did the insurance
companies a favor during World War II. Wartime wage controls prohibited
cash raises, so employers started giving noncash benefits like health
insurance to attract workers. The tax code helped this along by
treating employer-based health insurance more favorably than coverage
you buy yourself. And state governments have made things worse by
mandating coverage many people would never buy for themselves.

Competition also pushed companies to offer ever-more attractive
policies, such as first-dollar coverage for routine ailments like ear
infections and colds, and coverage for things that are not even
illnesses, like pregnancy. We came to expect insurance to cover
everything.

He concludes:

Imagine if your car
insurance covered oil changes and gasoline. You wouldn't care how much
gas you used, and you wouldn't care what it cost. Mechanics would sell
you $100 oil changes. Prices would skyrocket.

That's how it works in health care. Patients don't ask how much a
test or treatment will cost. They ask if their insurance covers it.
They don't compare prices from different doctors and hospitals. (Prices
do vary.) Why should they? They're not paying. (Although they do in
hidden, indirect ways.)

From TJIC:

"America cannot be great if most of its workers are in the service
sector"¦" Senator Byron Dorgan (D-North Dakota) declares in his book
"Take This Job and Ship It,""¦

This typical reading of historic manufacturing and service jobs stats is ignorant.  My first rule of quoting a statistic, which I admit I sometimes violate, is to make sure you understand how it is calculated.  Nothing could be truer than with manufacturing jobs statistics.

The best way to illustrate this is by example.  Let's takean automobile assembly plant circa 1955.  Typically, a large manufacturing plant would have a staff to do everything the factory needed.  They had people on staff to clean the bathrooms, to paint the walls, and to perform equipment maintenance.  The people who did these jobs were all classified as manufacturing workers, because they worked in a manufacturing plant.  Since 1955, this plant has likely changed the way it staffs these type jobs.  It still cleans the bathrooms, but it has a contract with an outside janitorial firm who comes in each night to do so.  It still paints the walls, but has a contract with a painting contractor to do so.  And it still needs the equipment to be maintained, but probably has contracts with many of the equipment suppliers to do the maintenance.

So, today, there might be the exact same number of people in the factory cleaning bathrooms and maintaining equipment, but now the government classifies them as "service workers" because they work for a service company, rather than manufacturing workers.  Nothing has really changed in the work that people do, but government stats will show a large shift from manufacturing to service employment.

Is this kind of statistical shift really worth complaining about?  By complaining about the shift of jobs from manufacturing to services, you are first and foremost complaining about a chimera that is an artifact of how the statistics are compiled.  So if we were to correct for this, would manufacturing jobs be up or down?  I don't know, but given on the wailing about "shrinkage" of manufacturing in the US, I bet you would not have guessed this:

Considering total goods production (including things like mining and
agriculture in addition to manufacturing), real goods production as a
share of real (inflation-adjusted) Gross Domestic Product (GDP) is
close to its all-time high.

• In the second quarter of 2003, real goods
  production was 39.2 percent of real GDP; the highest annual figure ever
  recorded was 40 percent in 2000. See the Figure.

• By
  contrast, in the "good old days" of the 1940s, 1950s and 1960s, the
  United States actually produced far fewer goods as a share of total
  output, reaching 35.5 percent in the midst of World War II.

So manufacturing is close to an all time high as a percentage of the economy.  There is absolutely no way anyone who looks at this graph can, with a straight face, talk about the "shrinking" of America's manufacturing sector.   If manufacturing employment is somehow down vs. some historical "norm", then that means that manufacturing productivity has gone up faster than service productivity.  So what?  And to the extent there has been a shift, as TJIC writes, who cares?

Yeah, we hates the service sector.

Who needs lawn care, child care, food preparation, legal
services, stockbrokers, professors, blogs, actors, and contract
software engineers ?

Let's get everyone involved in good 19th century atoms-and-mortar activities like raising corn and smelting iron.

Sure, some flakes argue "those are jobs for machines", but we
aim to recapture the glory of our national greatness, when men were
men, women were women, America was strong, and the average life lasted
50 years and ended with pneumonia, a threshing accident, or a crushing
injury.

The same populists who complain today about the shift from manufacturing to services complained a hundred years ago about the shift from agriculture to manufacturing.  And I am sure all of us would much rather be waking up with the sun each day to push a plow.

Jay Greene of the Manhattan Institute: (via Maggies Farm)

This
is the most widely held myth about education in America--and the one
most directly at odds with the available evidence. Few people are aware
that our education spending per pupil has been growing steadily for 50
years. At the end of World War II, public schools in the United States
spent a total of $1,214 per student in inflation-adjusted 2002 dollars.
By the middle of the 1950s that figure had roughly doubled to $2,345.
By 1972 it had almost doubled again, reaching $4,479. And since then,
it has doubled a third time, climbing to $8,745 in 2002.

Since
the early 1970s, when the federal government launched a standardized
exam called the National Assessment of Educational Progress (NAEP), it
has been possible to measure student outcomes in a reliable, objective
way. Over that period, inflation-adjusted spending per pupil doubled.
So if more money produces better results in schools, we would expect to
see significant improvements in test scores during this period. That
didn't happen. For twelfth-grade students, who represent the end
product of the education system, NAEP scores in math, science, and
reading have all remained flat over the past 30 years. And the high
school graduation rate hasn't budged. Increased spending did not yield more learning.

There is a lot more good stuff in the article, from class size to teacher pay.  I would observe that he misses one component of teacher pay -- that they tend to have higher than average benefit packages, which makes their jobs even more competitive with other professionals.  I covered much of the same ground 18 months ago in my Teacher Salary Myth post (which still earns me some good hate mail).

Kevin Drum takes the following statistic:

As a result, wages and salaries no longer make up the smallest share of
the gross domestic product since World War II. They accounted for 46.1
percent of all economic output in the second quarter, down from a high
of 53.6 percent in 1970 but up from 45.4 percent in the spring of 2005.

And declares it to be a bad thing.  He doesn't really explain, but as a frequent reader of his site I can guess his issue is that he interprets this statement as a sign of the weakening fortunes of the American wage earner.

Isn't it really dangerous to leap to such a conclusion?  I can think of a number of perfectly innocuous, even positive trends that would cause such a shift:

• Aging of population means more people retirement age who take their income in form of dividends, investment returns, pensions, social security, etc., none of which are included in "wages"
• Ownership of investment assets, and thus income from these assets, has spread from just the rich to the middle class, meaning most people get more of a share of their personal income from investments and asset (e.g. house) appreciation
• Entrepreneurship rates are way up since 1970.  This means many more people, particularly in the middle class, have given up working for someone else for a wage and now work for themselves for a business profit.

I know Drum wants to interpret it as a "the poor are poor because the rich take all the money" zero sum game.  Anyone know what is really going on behind these numbers?

A recent editorial in the NY Times by Stanford professor David Kennedy really has me flabbergasted. So much so that I have rewritten this post three times and still not been able to adequately communicate my horror of this editorial.   Mr. Kennedy argues that the all volunteer, non-drafted, non-coerced-service army is a huge threat to America.

But the modern military's disjunction from American society is even more
disturbing. Since the time of the ancient Greeks through the American
Revolutionary War and well into the 20th century, the obligation to bear arms
and the privileges of citizenship have been intimately linked. It was for the
sake of that link between service and a full place in society that the founders
were so invested in militias and so worried about standing armies, which Samuel
Adams warned were "always dangerous to the liberties of the people."

By the way, his words "disjunction from American society" are his coy way of saying a volunteer army is not somehow as representative of America as a draft army.  This
article, as far as I can tell, is totally and completely about the
benefits of
draft (without ever actually using the word).  He is arguing that
forced compulsory military service is somehow more democratic and more appropriate for a free society than voluntary
service.  Forgetting how stupid this is for a minute, why is the volunteer army so "disturbing" to him?   It is really hard to figure out.  He keeps saying things like "the danger is obvious" but I guess I am just stupid - I can't find a clear statement of the danger in his editorial.  The closest I get is this:

But thanks to something that policymakers and academic experts grandly call
the "revolution in military affairs," which has wedded the newest electronic and
information technologies to the destructive purposes of the second-oldest
profession, we now have an active-duty military establishment that is,
proportionate to population, about 4 percent of the size of the force that won
World War II. And today's military budget is about 4 percent of gross domestic
product, as opposed to nearly 40 percent during World War II.

The implications are deeply unsettling: history's most potent military force
can now be put into the field by a society that scarcely breaks a sweat when it
does so. We can now wage war while putting at risk very few of our sons and
daughters, none of whom is obliged to serve. Modern warfare lays no significant
burdens on the larger body of citizens in whose name war is being waged.

This is not a healthy situation. It is, among other things, a standing
invitation to the kind of military adventurism that the founders correctly
feared was the greatest danger of standing armies - a danger made manifest in
their day by the career of Napoleon Bonaparte, whom Jefferson described as
having "transferred the destinies of the republic from the civil to the military
arm."

So in other words, its bad that wars are much less costly in lives and property.  If wars are less costly, and the combatants volunteers rather than conscripts, then we as a nation are more susceptible to military adventurism.  His bio says he is a historian, but what possible historical evidence does he bring forward for this?  None.   

In fact, there is no evidence that the government is any less likely to send a non-volunteer army (e.g. Korea, Vietnam) into harms way than a volunteer army (e.g. Afghanistan, Iraq).  In fact, we may actually be starting to see, via reenlistment rates, that the volunteer army provides a useful check against unpopular wars.  The author wants to imply that we would fight fewer bad wars with a draft, non-volunteer army.  But does anyone think we could have fought the increasingly unpopular Vietnam War with a volunteer army?  Only the draft made continuation of that war possible.  So where is his argument now?

Beyond the fact that his logic does not hold together, how morally bankrupt is it to long for the day when wars were much more costly in terms of lives and property?  Oh for the good old days of the 1960's when we could watch those much higher draft army body counts on the nightly news.  My guess is that he is not actually arguing that we should go back to higher body counts, but that the bodies we do have should represent a broader cross section of America.  In other words, he wants more elite rich white bodies (but not elite rich white Stanford bodies, since he and the Stanford faculty actively oppose all sorts of military recruiting and ROTC programs on campus). 

I have zero tolerance for this kind of forced-to-be-free fascism.  I have no idea what the author's politics are, but his argument reeks of collectivism and totalitarianism.  Think I am exaggerating?  Here is how he concludes:

The life of a robust democratic society should be strenuous; it should make
demands on its citizens when they are asked to engage with issues of life and
death. The "revolution in military affairs" has made obsolete the kind of huge
army that fought World War II, but a universal duty to service - perhaps in the
form of a lottery, or of compulsory national service with military duty as one
option among several

Sorry, but in a free society, there is not universal duty to service.   There is not "link between service and a full place in society."  When someone starts arguing that you have a "duty to service" and that government should "make demands on its citizens" rather than the other way around, run the other way because they are selling totalitarianism.

Update:  This is a pretty compelling article about a volunteer army at work.  Would they really be better off with a draft?

The south gate of Muthanna army barracks in Baghdad is one of the most
frequently bombed sites in Iraq.

Suicide bombers have killed 198 people here since last year.
Almost all were potential recruits to the country's fledgling armed forces.
Another 465 have been wounded.

Body parts that had been hurled by an explosion over the 30ft
high concrete wall a week earlier were still being picked up when the second
suicide bomber struck last week.

But, in an extraordinary display of optimism, the youngsters
hopeful of being recruited into the forces still come to queue....

The young men and handful of women in the queues say they are as
keen for the private's salary of $400 a month as they are to serve their country
to rid it off insurgents.

There are others who have had friends and relatives among the
estimated 25,000 civilians killed over the past two years. Some also believe
that the only way to get an American withdrawal from Iraq is to build a secure
and substantial security force.

But all have an air of defiance, and in some of the fresh
recruits there is a hint of gratitude for just making it through the queue at
the murderous south gate, on Zawraa Road.

Postscript:  I'm not really into the patriotism finger-pointing exercises so many people are into nowadays, but if you want some of that, try conservative blogger Captains Quarters writing on this same editorial.

Jane Gault at Asymmetrical Information is on a roll with a series of posts about the problems with the Medicare system.  Check out her posts on the ,  the media bias when programs are cut, and the rising cost of Medicaid.

The problem in the world of health care costs is actually very simple:  patients have the incentive to over-consume services and providers have the incentive to over-provide services.  Patients consume as many services as possible because some other entity is generally footing the bills, such that the marginal cost to the patient of extra services is generally nil (if you don't believe this, imagine a world where a 3rd party paid for your car - would you choose the same care you drive today?)  Providers tend to over-provide in part for the same reason, and in part as a defensive response to the threat of torts.  As a result, costs go through the roof, and those who pay (government, insurance companies, employers) respond by rationing, which pisses everyone off.

This disconnect between the entity paying the bills and the entity selecting the care cannot endure.  The fix in the future is guaranteed to be one where the decision maker on the selection of care is the same person who is paying for the care.  The only choice we have in designing the system is whether that entity making the decisions is the government (as preferred by statists of all stripes) or the patient. 

We need a system where people pay their own everyday medical bills, with insurance in place for catastrophic needs (which is basically how we take care of our cars).  You could probably incentivize this tomorrow by making personal medical expenses tax deductible while at the same time making employer-provided medical insurance taxable just like every other kind of compensation.  Not only would this fix the incentives problem in the system, but would also eliminate the portability issue associated with employer-provided coverage.

Unfortunately, people have a huge mental block where paying for their own medical care is concerned.  My wife is a great example.  When I became self-employed, she was shocked that I did not get dental insurance.  I tried to explain that we would just use the insurance to pay for checkups and a filling here-or-there, and it would probably cost more than just paying the expenses ourselves.  But for her, medical bills are paid by insurance, not by individuals, and it actually felt wrong for her to pay her own doctor's bill (we have a big annual deductible on our medical insurance too so it acts mainly as catastrophic coverage).  This is not an isolated attitude - it is why many people equate "not insured" today with "not getting medical care".

Postscript:  There is nothing magical about the system of employer-paid medical insurance we have today.  Many large employers implemented paid health benefits as a way to evade government wage freezes during the NRA of the 30's and later in World War II.  In the tight labor market of WWII, government mandated maximum wages could not lure enough workers, so free health benefits were thrown into the compensation mix since only cash wages were frozen.  The system is perpetuated today by a tax code that does not tax health insurance as it does all other parts of the compensation package.

UPDATE:  Or, we could just try this

UPDATE#2:  A small example of the mindset:  Carly Fiorino get $42 million as a parting gift from HP, but still insists that HP privide her medical insurance.  With $42 million, she couldn't pay for it herself? (via gongol)

New, via Reason, comes this excerpt from an article by Milton Friedman:

After World War II, opinion was socialist while practice was free market; currently, opinion is free market while practice is heavily socialist. We have largely won the battle of ideas; we have succeeded in stalling the progress of socialism, but we have not succeeded in reversing its course. We are still far from bringing practice into conformity with opinion. That is the overriding non-defense task for the second Bush term. It will not be an easy task, particularly with Iraq threatening to consume Bush's political capital.

Reason links to the whole article.  I have said on a number of occasions that as a libertarian, one of the downsides of the Iraq war that does not get discussed much is that it diverted Bush II from promised market reforms, including tort reform and social security.  There appears to be some hope that these can be addressed in the second term.