Archive for the 'politics' Category

Occupational licensing and ex-cons

By JSC5

Matt Yglesias has had a great series of posts up about how little sense it makes for state governments to require certification before someone can provide simple services like haircuts. The silliness of occupational licensing is one of my pet issues, and I’m stunned by how many intelligent people spend time justifying the status quo instead of applying the free market principles they otherwise claim to support.

For an indication of just how ridiculous some of this licensing gets, check out this list of occupations in North Carolina requiring government licensing. Along with Yglesias’s hobbyhorse, barbers, North Carolina also requires government charters for athletic agents, chick and egg dealers [presumably referring to chickens], geologists and soil scientists [but no other scientists], interpreters, landscape contractors, manicurists, refrigeration contractors, seed dealers, and scores of other workers.

Those of us who question the extent of occupational licensing in America usually argue that it is just a tool that helps currently-licensed providers limit competition and thus artificially raise prices and profits — all while hiding under the guise of consumer protection. To be sure, licensing is a good idea for certain classes of services in which market forces and lawsuits don’t provide sufficient deterrent to and remedies for harm. But how does “landscape contractor” fall into that category? Anyone who believes that landscape contractors clearly need a government license to operate, while gardeners are good to go without public imprimatur, is probably letting their preexisting beliefs and status quo bias guide their ‘principles’.

But back to Matt Yglesias. His final post in the series praises Barack Obama for making some positive moves towards liberalizing Illinois’ licensure regime.

And Yglesias is partly right. Barack Obama, as a state senator in Illinois, was the primary sponsor behind a bill that eased occupational licensing restrictions for convicted felons. The felon, after living crime-free for a period of time and documenting certain pro-social behaviors, could apply for a ‘Certificate of Relief from Disabilities’ (CRD) that would remove certain legal disabilities all felons face when released into the world. No longer would a single felony conviction bar someone from getting a license to cut hair; the licensing board would have to come up with some other excuse, instead.

Yglesias is skeptical about the broader impact of the CRDs:

“The problem here is that when you set up these boards, they have incentives to think up any kind of halfway plausible reason to bar people from entering the field.”

Remove the felony bar, the logic goes, and the boards will just come up with other flimsy excuses.

He’s almost certainly right about most licensing boards and most occupations. But in the particular case of Illinois, the problem isn’t that the licensing boards don’t approve ex-cons despite their Certificates. It’s that few ex-cons end up applying for licensing in the first place. As this report (PDF) indicates, only 47 applications for CRDs were made within the first 2 years of the program’s implementation. Of that extremely low number, 81% of applications for CRDs were approved. But none of those recipients ended up applying for occupational licenses within the observation period. That said, a very few ex-cons without CRDs did apply for occuptional licenses, and 67% of those applicants were eventually approved during the same period.

The bottle-neck in Illinois, then, isn’t necessarily the board rejecting felons, but qualified felons not knowing about or not applying for CRDs or occupational licenses in the first place.

I guess the take-home lesson here is that occupational licensing boards really can be nothing more than thinly disguised guilds covering their own economic interests. But occupational licensing reform isn’t exactly the key to rehabilitating felons. Connecting felons with existing benefits and procedures is the easy low-hanging fruit there. That doesn’t mean that making it easier for ex-cons to become barbers isn’t worth doing … it’s just not the kind of major reform that should get our blood pumping. It turns out that the actual benefit of CRDs may just be the perception among private employers that the state says these guys (and they are mostly guys) are safe(r).*

* No, I didn’t closely follow Barack Obama’s occupational licensing and recidivism reform policies in the Illinois state legislature. I came by this knowledge honestly, as part of a much larger research project this summer.

Liberal Caricature

By JSC5

Yesterday, co-blogger JSC7 linked to a bunch of new posts out there on the nets about how to effectively manage your online time and get away from destructive overconsumption. JSC7 ended the piece with a keen observation about the importance of models of healthy living, and how we basically don’t have any for internet use:

“We don’t yet really have a firm sense of what is living well or badly in the modern world, the way we do with say, alcohol consumption or other addictive vices.”

As a matter of societal consensus, I think JSC7 is right.

However, it seems to me that there actually is a sizable group of people who are seriously grappling with “what it is to live well or badly in the modern world”. Those people are hippies, or leftists, or ‘limousine liberals’, or ‘latte-sipping, volvo-driving elitist snobs’, or granola west coasters — at least, that how they get caricatured.  These are the people who self-consciously think about their diets and their impact on the world, go out of their way to avoid dumping their externalities on the world, and limit the time they spend in front of the TV or ditch the TV entirely. And they’re also the people who are trying to spend more time outdoors jogging or playing Frisbee golf than inside on the internet.

And, as we all know, those people are all caricatured and ridiculed by the rest of us. It seems like ‘we’ actually do have a fairly good model of what healthy, ‘good’ living is supposed to look like in the modern world: eat more local, organic produce; don’t light a barrel of oil on fire to keep your living room warm; get more exercise; spend less time staring at a screen and more time interacting with real live people. Healthy internet use seems like part of an entire lifestyle package.

And even though ‘we’ all know what the right thing to do is, we can’t imagine adopting that lifestyle entirely. The magnitude of the change frightens us. So instead of accepting the superiority of healthy internet and exercise choices and making incremental improvements to our lives, we end up bragging about eating at McDonald’s and not driving a Prius. The real shame there is that the markers of a healthy lifestyle — which have no business being a partisan issue — get turned into partisan markers in a weird, tribal way. It’s terrible for our society when the healthy model of modern living turns into a liberal caricature that no one feels like emulating.

gay marriage! controversy! slow down!

[by JSC5]

I’m a little late in getting to this, but a federal judge has ruled that California’s Proposition 8, which prohibited gay marriage in that state, is unconstitutional. I like to think of same-sex marriage is one of those “duh!” issues, like beer deregulation or early childhood education. We recognize, however, that despite how simple an issue it is for some, same-sex marriage has caused a great deal of controversy for other people. Orin Kerr had a post up recently over at Volokh Conspiracy that took this fact of controversy and conflated it with actual importance. He starts by quoting Judge Walker’s ruling, and then responds to it:

[Judge Walker’s opinion]: “Because the evidence shows same-sex marriage has and will have no adverse effects on society or the institution of marriage, California has no interest in waiting and no practical need to wait to grant marriage licenses to same-sex couples. Proposition 8 is thus not rationally related to proponents’ purported interests in proceeding with caution when implementing social change.”

[Orin Kerr’s commentary]: Whatever your views of same-sex marriage — or Judge Walker’s decision as a whole — I think this particular part of the analysis is pretty weak. First, the idea that same-sex marriage is not a significant social change strikes me as plainly incorrect. This is one of the more significant questions of social policy of our time: Whether you think it’s the greatest advance for civil rights in America or the end of the world, it seems pretty clear that it’s a big deal.

Now, gay marriage is certainly politically salient in that it stirs up emotions and seems to divide people into two camps. That said, I don’t think it’s nearly as polarizing as he makes it out to be. Who exactly is Kerr hanging out with to make him think that mainstream opinion runs from “the greatest advance for civil rights in America” to “the end of the world”? I know a lot of pro-gay marriage people, and I don’t think a single one thinks that gay marriage clearly outranks the civil rights movement for African-Americans or the women’s rights movement. Furthermore, I know many (though fewer) anti-gay marriage people,  none of whom think it will seriously end the world. In fact, mainstream opinion on this subject seems to stretch from “good idea/duh” to “I’m concerned about it/ewww”.

Either way, I’m not sure that the actual level of controversy even matters. It seems that Orin Kerr is confusing (1) political salience with (2) actual breadth or depth of change. What exactly is the evidence Professor Kerr would offer up in defense of his contention that same-sex marriage is “one of the more significant questions of social policy of our time”? The simple fact that Americans fall into two broadly equal pro and con camps isn’t enough. Lots of issues – both important and superficial – are politically salient in a similar way,  so the mere fact of salience can’t help us to distinguish actual importance.

Just how important and sweeping of a change would gay marriage be? Judge Walker;’s answer (quoting a bevy of experts who testified at trial) is that it’s pretty important for the gay couples who would get married, and not at all important for everyone else. In response, Orin Kerr says that the mere fact of political controversy proves Judge Walker wrong.

It’s an effective strategy for troglodytes trying to make sure that gay people don’t have the same rights as everyone else. They don’t even need to marshal any real evidence or reasons as to why the proposed reform would be bad or that implementing it right now would be dangerous; all they need to do is disagree, and the disagreement becomes the evidence.That is, until smart professors like Orin Kerr, along with the rest of us, some day stop believing the hype.

Do markets understand politics?

[by JSC7]

Ezra Klein weighs in on Tyler Cowen weighing in on the Krugman/Rogoff debate about what debt-to-GDP ratio America can stand before growth starts to feel a drag. Klein says that maybe we shouldn’t be worrying about the specific number, but rather how well our political system can deal with the problem in general. Money quote:

But the driver behind that question is not how much debt we have, it’s whether our political system can make the difficult choices to deal with that debt. So long as the political system is working reasonably well, we can get out from even quite a lot of debt. But the more it breaks… the more it has reason to worry.

What I think is worth asking, if that’s the case, is how well our business world understands the political system. We talk a lot about how politicians don’t understand economics, but what if the reverse is true? Even assuming no change in the system itself, it’s a pretty opaque system to someone who isn’t involved in it (not relevant to the budget, but all the stuff coming out of the Top Secret America report can’t be an anomaly). But, of course, you have to factor in the political systems ability to change itself, especially in response to crises (like a ballooning deficit). I don’t know how many people on Wall Street have a good sense of this.

Especially when it comes to the budget deficit, you can see the possibility of a self-reinforcing feedback loop. Businesses think that government will respond reasonably to a large deficit, and so U.S. Treasury prices stay low, but because Treasury prices stay low, the government doesn’t feel an imperative to fix the problem, and maybe even continues to make it worse. If that’s a threat, then I’m glad we’re having debates about what debt-to-GDP levels are feasible, because it at least gives us a chance to point to a concrete number and say, okay, now we have a problem, rather than relying on markets to correctly predict politicians or vice-versa.

How to end tax expenditures the right way

[by JSC5]

As per Ezra Klein in today’s Wonkbook, Martin Feldstein has a plan for decreasing the deficit: end tax expenditures.

Now, regular readers of the blog will remember tax expenditures from one of my old posts inspired by the craziness of Hawaii’s ‘Exceptional Tree’  tax deduction. The basic point to remember with tax expenditures is that they give people money through the tax code instead of by cutting them a check directly. In many ways, tax expenditures and direct spending are exactly the same: the net effect on recipients is the same (they get more money), and the net effect on the government is the same (it gets less revenue).

But tax expenditures come with a whole host of negative effects. By making Swiss cheese of the tax code, they make compliance overly complicated. They distort work and income incentives. They don’t need to be reauthorized, so they tend to persist for a long time without any legislator taking a look at them and making sure they’re still a good idea. Furthermore, most people miscategorize tax expenditures as tax cuts instead of spending, so they are easier to enact and harder to repeal than regular spending programs. Just about any economist would tell you that we should run spending programs through normal spending procedures while keeping our tax code standardized and simple.

So it’s unsurprising that veteran economist/conservative political operative Martin Feldstein has come out against tax expenditures. As a foe of tax expenditures myself, I heartily welcome the support. And yet I find it hard to really trust his plan. Let me explain.

Feldstein begins his argument for cutting tax expenditures by mentioning three areas in particular that rely on the tax code for spending: education, child care, and health insurance. One gigantic tax expenditure – the mortgage-interest tax deduction – doesn’t get a mention until the very end of the article, when Feldstein says it’s probably best to  slightly reduce (not eliminate) the deduction “to avoid economic disruptions.” Did you catch the pattern? Tax expenditures that liberals and Democrats support get the axe. Tax expenditures that conservatives and Republicans support are handled with kid gloves, since – gosh! – they’re particularly important!

The lesson I draw from reading Feldstein’s politically-opportunistic support for tax expenditures is this: if we’re really going to end spending programs through our tax code, then we need to do it all at once and for everything. If you take it issue-by-issue, then there’s always going to be a big lobby in support of that particular expenditure and a small minority whose primary concern is tax expenditures in general. Mr. X is a high income homeowner and votes yes on eliminating education tax credits and no on mortgage-interest deductions. Mrs. Y is a low-income renter and votes the opposite way. Nothing gets done.

My proposal is simple: pass one bill to eliminate tax expenditures as a way to run programs and automatically convert all tax expenditures into equally-sized direct expenditures. Everyone congressperson who dislikes tax expenditures as a tool of government can get on board — regardless of the actual content of any particular tax expenditure. Tax expenditures won’t get used as a political football by advocates with an axe to grind. Then we can leave decisions about actual levels of spending to a case-by-case review at Congress’s leisure.

We get the benefits of a vastly-simplified tax code, with easy compliance and standard, predictable incentives. And small government conservatives would still find plenty to like here. The calculus has changed: everyone now realizes that these are real dollars being spent, moving through the regular appropriations process.

That’s what real concern about tax expenditures looks like. And that’s why I doubt Professor Feldstein’s commitment to Sparkle Motion.

State-owned enterprises

[by JSC5]

A good illustration of the incoherence of our discourse about government-owned enterprises, from today’s NYT:

Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program of the Treasury Department, said both carmakers [GM and Chrysler] needed to shut down some underperforming dealerships. But it questioned whether the cuts should have been made so quickly, particularly during a recession. The report, released on Sunday, estimated that tens of thousands of jobs were lost as a result.

After having read and watched most of Mr. Barofsky’s congressional testimony for a one of my jobs, I can honestly say that I think he’s done a great job as Special Inspector General for TARP. This latest SIGTARP report, however, seems to suffer from a problem shared by just about all analysts, commentators, politicians, and academics who work on bailout issues and the problems of state ownership. What exactly are our goals with these bailed-out institutions? Should we run them for the public benefit, or run them as businesses to return them to profitability as soon as possible? Or do we have hybrid, competing goals?

I think conservatives (and the rest of us!) were worried that state-owned enterprises would get treated like adjunts of the state and be forced to operate suboptimally in order to support public goals like employment. It now turns out that the Administration, perhaps afraid this perception, has been very aggressive in pursuing profit-maximizing personnel cuts and dealership reorganizations. Does anyone think this will win the Administration any love from conservatives (or from the rest of us)? If anything, the Adminstration is now catching flack for not doing enough to support employment.

All I’m saying is, we need to decide what the proper goals for SOEs are. And then we need to tell SIGTARP, congressional representatives, and everyone else in the system, so that we don’t get whiplash going from shouts of “socialism!” to “free market ideolog!” in 2.6 seconds.

Douthat: right policy, wrong politics

[by JSC5]

Ross Douthat’s column today presents a smart critique of the richboy subsidies and corporate welfare enshrined in current law, from the mortgage-interest tax deduction to agricultural subsidies and lack of means testing in Medicare and Social Security. It’s a broad, if not very definitive, endorsement of a more egalitarian state that doesn’t shovel quite so much money towards non-needy recipients each year. There’s a lot of good policy that could come out of Douthat’s vision, and it is heartwarming to have a voice of sanity on the right these days — even if he is (sadly) out of the mainstream of his own party and completely without influence over actual Republican decision-makers. So instead of offering the kind of backhanded compliment you just read in the previous sentence, I should probably be doing my bit to politely encourage engagement on the general principles Douthat lays down.

But I just can’t keep myself from pointing out a very weird moment in Douthat’s column:

“The trick is to channel those [pitchfork] impulses in a constructive direction. The left-wing instinct, when faced with high-rolling irresponsibility, is usually to call for tax increases on the rich. … [But] the class warfare we need is a conservative class warfare, which would force the million-dollar defaulters to pay their own way from here on out.”

So Douthat wants us to believe that leftwingers wake up every morning looking for a tax they can raise, while the conservatives are the adults in the room making sure the government doesn’t subsidize the rich? Pardon me while I scoff. Douthat’s error here is common, if not innocuous. All of us have the tendency to let tribalism infect rational political debate. But it’s still improper to identify a good set of policies and then assume that because (a) you like those policies, and (b) you usually see yourself on Team Red, then (c) those must be conservative policies. It seems to me that means-testing parts of the safety net, rolling back subsidies of McMansions and suburban sprawl, and cutting Big Agra’s welfare checks are all … not conservative policies. They’re broadly ‘liberal’ policies, with everyone from leftwingers like Ezra Klein and Matt Yglesias to libertarians like Tyler Cowen* signing up for the same general principles. To my knowledge, no such broad swatch of leading conservative intellectuals (besides Douthat) are ready to heartily endorse these reforms.

Now, to be fair, you’d be hard pressed to find actual politicians of either political flavor ready to sign on to these reforms. But at least they are operable ideas within the liberal realm of thought!

That said, I now retract my backhanded compliments to Douthat, replace them with forehanded compliments, and politely encourage more people from all political walks of life to seriously engage with the issues Douthat raises in his otherwise excellent column today.

—-

* My apologies for not providing links here. I’m just extrapolating from past posts I’ve read of each of their work. If anyone finds information to the contrary, please let me know and I’ll update.

Vote for the smart, hardworking one

[by JSC5]

For a couple unrelated reasons, I’ve watched more legislative committee hearings in the past week (about 20 hours worth) than the average political junky will watch in a lifetime. It wasn’t an experience I’d really recommend to anyone else, so let me save you the trouble and summarize the take-home lesson: the vast majority of legislators in this country don’t know the first thing about anything. If we really understand that, then we should start changing the way we vote.

It’s true that your average voter dislikes a number of things about politicians. They’re perceived as being  slightly above used car salesmen in terms of trustworthiness. They’re seen as baby-kissing blowhards, shills, ideologically extreme, and creatures of special interests. But I don’t think voters usually think of politicians as dumb, ill-informed, or lazy. The stereotypical pol is far too devious and calculating to be dumb or ignorant!

But I’m here to tell you that your average politician actually is ill-informed and not very interested in learning. It’s true on the federal level, where the entire saga from the crash in 2008 to the financial regulation bill today has been hampered by a basic ignorance of how financial markets work, how they interface with the real economy, and how government policies work in this sphere. The (relatively) informed debate on health care reform is the one exception that highlights the general rule. Health care has been item #1 in progressive politics for several decades. Any politician that wanted to get progressive support had to get educated on it. And once it became a live debate on the federal level — ie, in the last 17 years or so — every politician that wanted conservative support had to bone up on the subject as well. But there aren’t many issues out there with that kind of electoral importance. In fact, it’s hard to think of a single one right now that carries the same import among the groups that determine what politicians care about.

That means politicians are free to be as ignorant as they want. And as uninformed as your average pol is on the federal level, it’s even worse in the state capitol: the elections aren’t as competitive, the activist and lobbying interests aren’t as well organized, the agendas are thinner, and elite politicians usually leave as soon as possible, dropping the average.

This leads to two unfortunate outcomes: (1) staff and lobbyists fill in the gaps left by politicians’ ignorance, letting them drive much of what happens in the legislature, and (2) most politicians are bench warmers, with only a few engaged pols taking an active role in the process. As a professor in college used to say, 90% of the work in Congress is done by 10% of the people.

This surely isn’t news to those of you who have any experience in legislative politics. But for the rest of the gin-swilling*, unwashed** masses: do yourself a favor and vote for the hardworking, smart guy/gal in the race. It’s hard for me to tease out how important competence is compared with policy positions, but it’s definitely in contention. A willingness to do your homework and come to a committee hearing prepared is rare, but the rewards for those who do — and for their constituents — are great.

As a post-script, let me say that while I’m as critical (if not more so!) of politicians as the next guy, I’m actually with Jonathan Bernstein in saying that I actually like politicians as a group. At least part of it, for me, is the fascination with a set of people who have basically said, “I’m opening up myself to be absolutely despised, denigrated, and mistrusted by a broad swath of society because” … well, fill in the blank. There are lots of ways to finish that sentence, but nearly all of them at least make for an interesting character.

* Not that there’s anything wrong with swilling gin! It’s just a catchy way of describing the general public I picked up from a fun, pompous professor I once had.

** Being unwashed actually is something of a problem. Luckily hygiene standards have improved greatly since the 19th century. But there’s still those select few, primarily hipsters, who have yet to discover ironic bathing.


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This is a group blog. JSC5 currently writes from the US. JSC7 writes from behind the Great Firewall of China.

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