Thursday, April 28, 2011

Keynes & Hayek, second round

Another great video from your friendly neighborhood heterodox economists at GMU. The Hayek they feature is Austrian-lite; he basically propounds only those points well accepted in neo-classicism. In addition, they've got an excellent Ben Bernanke lookalike.

Tuesday, April 26, 2011

Gender Equality

The NYTimes (gated) names names and harms reputations in an article about how colleges use creative "roster management" to get around the Title IX quota that prescribes a 1:1 ratio of women to men in college sports.

The article points out the unfairness of it all: only 46% of Div-I athletes are women, even though 53% of students are women. An activist is quoted, "Intercollegiate athletics are rare educational opportunities, subsidized with our tax dollars, which deliver superior lifelong returns on investment. When an athletic department engineers itself to produce only the appearance of fairness, they flout the law and cheat women."

To be sure, Global Review holds no brief for those who try to sneakily break the law. The law is the law. But this article is burying the lede! The real scandal here is that the Federal government believes that women must have equal athletic opportunities to men, but does not care whether men have equal educational opportunities to women. In its current application, the law rests on either the proposition (a) that women are more important than men, or (b) that athletics is more important than education.

Of course, the true reason for this law is historical, and the law is dated to an era when women were a minority on college campuses and when many of them felt incapable of advancing in society without the help of the government. While that may have been the case in 1972, surely it is not the case in 2011, in the most liberal branch of American life.

More generally, for those who believe that it is the government's job to continue leveling opportunities and rewards throughout life, why no law mandating that college enrollments be gender balanced?

Friday, April 15, 2011

Crime and Punishment

Alan Hevesi is a convicted thief and former New York State Comptroller. As the sole trustee - the one official responsible - for New York's $125 billion pension fund, he accepted bribes and corrupted his office. For this, he's been sentenced to jail. But only for 1 to 4 years! He supposedly accepted a million bucks as a bribe; that's more money than most New Yorkers make in a decade, let alone one-to-four years.

To put this in context, a Goldman Sachs programmer who stole codes is going to lockup for 8 years, and a small-time con artist is looking at 2.5 years. Can anybody find how much time a bank robber or serial car thief would face? I'll bet they get harder time than this scoundrel Hevesi.

The punishment should fit the crime, and the crime here involved a large sum of money and an egregious breach of public trust. Both of those factors militate towards harsher sentencing of big-time corruption by an elected official.

Thursday, April 14, 2011

The Unserious Mr. Obama

In days of yore, the two American political parties blamed each other for the national debt. They each offered a clear vision to controlling the deficit based on cutting each others' pet programs. Each blamed the other party for politicizing entitlement reform, and the minority decried earmarks while the majority indulged in them.

That was then; this is now. Now, the earmark factory has been shut down. Now, Rep. Paul Ryan (R-WI) has set the agenda for the next two years with a very detailed, often painful plan to bring the deficits to a manageable level. It's not very ambitious: it doesn't offer serious hope of finding a budget surplus, but it's a step in the right direction. Mr. Ryan's budget proposal includes a much needed simplification of the tax code. In order to keep that simplification revenue-neutral (and thus tax-burden neutral), it lowers marginal rates as it closes loopholes. On average, everyone will pay the same amount of tax - we'll just spend less time doing our taxes. That shouldn't be controversial.

More controversially, Mr. Ryan offers a reasonably bi-partisan Medicare reform. Instead of the government paying marginal increases in the cost of care, allowing providers to inflate costs and bloat overhead, government will cover most of the cost, but let consumers pay the marginal cost. That will give a big incentive to keep costs close to the amount of the government voucher. Obviously, there are issues with this approach (how do we deal with the truly poor? How do we calibrate the voucher amount?), but it makes general-equilibrium economic sense, and it maintains the key fixture of social insurance.

Most surprisingly, Mr. Ryan's budget doesn't do what past Republicans have done: find scads of savings in Democrats' favorite programs. The big savings come from Medicare, which has thoroughly bipartisan support. Mr. Ryan isn't trying to shut down the department of education, and he pays verbal homage to the social safety net. For a staunch conservative, that's a bit surprising.

Mr. Obama's response yesterday, and actions throughout his presidency, have been even more odd, coming from a Democrat. Rather than attack defense spending (as Democrats usually do), he's grown it. His current budget suggests that he's going to "work with" military leaders to find savings; the fact that he has no concrete suggestions for cuts should be shameful. After all, he's had two years as Commander in Chief! It's not as though the need for austerity is suddenly upon us. If Mr. Obama has been sitting on $33 billion annual savings in defense spending for the last two years, he owes us an apology. Seriously, if a peacenik Democrat can't find specific defense spending to cut, what can he find??

As the WSJ points out, Obama inflates the savings under his plan by adding two more years to the normal ten-year budget window. That's a cheap way to turn $3.3 trillion into $4 trillion. Probably the shadiness is more severe: by promising to make cuts during the next president's tenure, he can sound like a reformer without feeling the pain.

Mr. Ryan hopes to be in Congress for another 10 or 20 years, and his Medicare reforms won't kick in for a while; sensibly, he doesn't want to change things for current Medicare recipients, just for the under-55 set. Mr. Obama has no hope of being president more than 6 years from now, and he really has no power at all to bind his successors to his policies. If he has no way of doing something now - during the 2 remaining years for which we elected him president - then he's fundamentally unserious. Mr. Ryan, at least, has a good chance of being around to feel the pain when these long-term reforms come due.

Mr. Obama, while proposing an average of $330 billion of savings over the next 10 years, with 3/4 of that from spending reductions, just fought tooth and claw to prevent spending cuts of $60 billion over the current budget half-year. When, exactly, is all this saving and cutting going to start? Before the Tea Party Congress was elected, Mr. Obama originally proposed a 2011 budget with $40 billion more in spending - $40 billion more than the stimulus-bloated 2010 budget!

Obama reached for hope in his speech, saying:
Here’s the good news: That doesn’t have to be our future. That doesn’t have to be the country that we leave our children. We can solve this problem.
A president running trillion-dollar deficits, tying the fiscal hands of his successors, and leaving his daughters' generation to pay off massive debts wants us to believe he cares about the country "that we leave our children"? Mr. President, I'm pretty sure our children will be better off if they don't have to spend their entire lives paying interest on their parents' debts.

Wednesday, April 13, 2011

Name of the Year!

Better late than never! The 2011 Name of the Year competition is underway. Cast your votes here. Get those votes in for Tuesday Muse, an Atlanta kindergartener who is excited to be at the dance, but is currently losing in the first round.

My favorites from this year's field are Heidi Hohl, Rev. Demon Sox, Cruise Citation Mangle, La'Peaches Pitts, and Yu Arufuka. For some reason, the bracket's right side seems much stronger than the left, where Mercedes Bunz and Flamur Kastrati pass for standouts.

Tuesday, April 12, 2011

The Wage Gap

Carrie Lukas does an excellent job debunking the wage gap in an OpJo piece. Acknowledging that the average working woman makes 70% of the average man's wage, it's easy to see that this arises from endogenous factors, not irrational bias against women. The recession highlighted this, as it (predictably) hit men harder.
The Department of Labor's Time Use survey shows that full-time working women spend an average of 8.01 hours per day on the job, compared to 8.75 hours for full-time working men. One would expect that someone who works 9% more would also earn more. This one fact alone accounts for more than a third of the wage gap...

Women gravitate toward jobs with fewer risks, more comfortable conditions, regular hours, more personal fulfillment and greater flexibility. Simply put, many women—not all, but enough to have a big impact on the statistics—are willing to trade higher pay for other desirable job characteristics.
Of course, this doesn't prove that bias doesn't exist. But look at how things go when men and women look statistically similar:
In a 2010 study of single, childless urban workers between the ages of 22 and 30, the research firm Reach Advisors found that women earned an average of 8% more than their male counterparts.
Intelligent accounting for bias needs to come on a much more detailed level: within specific occupations, and at specific companies. It's very difficult, in labor economics, to be certain that unobservable characteristics (say, personality or ambition) are not correlated with observable ones (gender, education, race), and given how drastically men and women differ in their economic choices, it's hard to convincingly show bias in most cases.

Monday, April 11, 2011

France Effects Regime Change in Cote d'Ivoire

France put her tanks and men at the service of the recognized victor of Cote d'Ivoire's election, forcing out lapsed democracy advocate Laurent Gbagbo, who morphed into a kleptocrat once he lost the election. This is a surprisingly muscular response from France, and may be regretted, depending on how the new majority treats the defeated Gbagbo supporters.

More broadly, do the interventions in Libya and Cote d'Ivoire make Western military protection of democrats a general principal? The payoffs from this approach to the developing world could be very good or very bad.

Friday, April 8, 2011

Congress Budges

With minutes left on the clock, Congress and President Obama compromised to pass a budget with $37 billion of spending cuts. That's pretty close to an even compromise between the $6 billion in cuts proposed by Obama and the $61 billion initially sought by the G.O.P.

Naturally, both sides praised themselves - "historic" said Senator Harry Reid and Representative John Boehner. The latter claims this will "save $500 billion over ten years". Really? As far as I know, it's a slightly-less-than-six-month budget, and this acrimonious process will start all over again in September. I'm pretty sure the 800,000 Federal workers who would've started unpaid vacation on Monday had this not passed won't be calling themselves "historic" for showing up to work and doing what they're paid to do. Memo to Barack, John, and Harry: we're not as impressed with you as you are.

After this bruiser, could both sides agree to a valuable reform? Let's move to two-year budgets. Each Congress will get to pass one, rather than spending half of every year haggling over increasingly irrelevant spending levels.

Tuesday, April 5, 2011

Ryan Agonistes

"Paul Ryan has grasped reality with both hands. He is forcing everybody else to do the same." So says David Brooks, in an effusive column about Ryan's very serious, fiscally and philosophically sound budget plan, due for full release today. Brooks' take is as much hopeful as truthful: he wants everybody else to take a realist, no-sacred-cows approach to budgeting. Hopefully this will be true within the Republican caucus and maybe even at the White House; it's probably too much to hope that legislative branch Democrats take spending cuts and tax reforms seriously, rather than screeching about how the REPUBLICANS ARE GOING TO TAKE YOUR MEDICARE AWAY!

That's not to say Republicans wouldn't do the same thing, in reverse, if it was a serious Democratic plan to raise and reform taxes or cut military spending. But until such a plan is forthcoming, the Dems are the only party that faces the tough choice: should I do good for my country or for my party?