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Don't Bail Me Out Bro:

South Carolina governor Mark Sanford writes in the WSJ that the federal government should not bail out state and local governments pinched by the current economic crisis. Whatever one's view of the financial bailout measures enacted thus far, Sanford argues, allocating additional funds to state and local governments rewards behavior, such as unconstrained spending increases, and will do little to improve economic conditions. He also notes that a bailout would reward fiscally irresponsible states (e.g. California, which nearly doubled state spending in ten years) at the expense of those states that exercised greater fiscal restraint. A better way to ease the pressure on state budgets, Sanford suggests, is to reduce federally imposed unfunded mandates, such as those associated with the REAL ID act. I am all for reducing excessive federal mandates, but I doubt it would do all that much to help those states in the most dire fiscal straits.

Redlands (mail):
Better solution might be for the federal government to stop many of its national programs that "benefit" us at the local level, for good, so that more of the money could stay at home in the first place.
11.16.2008 10:26am
Aaron Williams (mail):
"federally imposed unfunded mandates"

Aren't those unconstitutional under Printz?
11.16.2008 10:37am
MarkField (mail):
Sanford's point, by itself, is incomplete. He doesn't distinguish what the money was used for. Some state spending is fully justified, some is not. Some states were irresponsible, others were not.

The biggest problem with state government spending is that it reinforces the economic cycle. In good times, state spending increases (often irresponsibly), adding to the potential for inflation, and in downturns it contracts, making the downturn worse. We need a system which is counter-cyclical.
11.16.2008 10:53am
John S. (mail):
We need a system which is counter-cyclical

Here here. Save when times are fat; spend when times are lean.

Here in Michigan, there have been rumbling about changing the gas tax to be based on the wholesale price of oil; I'd rather it be an inverse sliding scale. For instance, when gas is $2/gallon, raise the tax from the current $0.56/gallon to $1/gallon. When gas is $4/gallon, drop it to $0.10/gallon (these numbers are of course made up as an illustration of the concept)
11.16.2008 11:13am
A. Zarkov (mail):
"A better way to ease the pressure on state budgets, Sanford suggests, is to reduce federally imposed unfunded mandates, such as those associated with the REAL ID act."

Getting rid of the REAL ID act would be a bad idea as it provides some deterrent to illegal aliens. Illegal aliens are a big, unnecessary and unjustified expense for California.

All that being said, California is certainly a spendthrift state par excellence. San Jose wants in on TARP-- San Jose mayor seeks slice of bailout pie. How much? Oh say a cool $14 billion!
11.16.2008 11:20am
A. Zarkov (mail):
Brother can you spare a dime-- Bing Crosby. A favorite Depression area song. I guess we have to update it to something like "brother can you spare $100 billion."

Coming to a theater near you soon-- the entitlement mentality meets reality.
11.16.2008 11:30am
Hoosier:
He also notes that a bailout would reward fiscally irresponsible states (e.g. California, which nearly doubled state spending in ten years) at the expense of those states that exercised greater fiscal restraint.

What I find interesting: Alexander Hamilton faced the same objection to his First Report on the Public Credit. Then, too, it was southern states that objected. Same old change.
11.16.2008 11:34am
CrazyTrain (mail):
Considering that South Carolinagets $1.35 back from the feds for every dollar it puts in, while California gets only 80 cents back, and also gets quite a bit more in earmarks per capita than California I think the honorable gub'ner ought to shut his hypocritical, self-righteous pie hole about this topic.
11.16.2008 11:48am
William Oliver (mail) (www):
Obama's entire philosophy is based on the victim/victimizer dichotomy.

People who do well do not do so by their own actions, and thus should not benefit from them. Even if they made good decisions and made sacrifices for success, they only did so because they were socialized to do so and deserve no personal credit or benefit for it. People who do well do so only because they act immorally or have an unfair advantage, and thus have no claim to their property.

Those who do poorly only do so because of unequal circumstance and victimization; they are not responsible for any poor choices they may have made because of the effects of socialization. Thus, it is only fair that they take the property of others to make up for these inequities.

I have little doubt that the same reasoning would apply equally to the states.
11.16.2008 11:54am
Cornellian (mail):
Obama's entire philosophy is based on the victim/victimizer dichotomy.

People who do well do not do so by their own actions, and thus should not benefit from them.


Of course, the rule doesn't apply if you're a Wall St. banker.
11.16.2008 12:40pm
pintler:
Spend less at the federal level, and let each state decide whether to spend less or raise taxes?

The whole send-tax-money-to-DC then send-it-back-as-grants system is broken. It's not rational for a locality to refuse federal grants when you have already sent the money in, even if local sentiment doesn't think the project is worth it. That disconnect just isn't, IMHO, how to run a budget.
11.16.2008 12:45pm
pireader (mail):
Professor Adler --

Mark Sanford is extraordinarily ideologically rigid. (When he served in Congress, only Ron Paul had a more-conservative voting record.) So it's not surprising that he wrote this op-ed. And it's hardly surprising that the Wall Street Journal editorial page -- the mothership for wacky right-wing "economics" -- published it. But you're usually very thoughtful in your posting; so I'm surprised you lent your megaphone to such a rant.

Sanford raises two issues. First, have some states been more-prudent than others in their spending? Second, how should the Federal government respond to the recession that's now crashing down on us?

Sanford's answer to the first is just empty ideological posturing. His evidence seems to be that California increased its spending dramatically over the past decade.

Well, duh. That's because California's population and economy expanded. State and local government spending went from 20.45% of GDP in 1996 to 20.95% in 2006 ... basically flat. (2007 data is not yet available).

Sanford's South Carolina didn't have that kind of spending increase because their economy just didn't grow as fast, averaging only 2.2% per year vs. California's 3.5%. Which is hardly an argument for the South Carolina approach.

As to the second issue--Sanford's answer is more ideological nonsense. But in this time it's actively harmful, to South Carolina as well as the other states.

Even mainstream conservatives recognize that government plays a key role in combating recessions by increasing its deficit spending. (As Richard Nixon said, "We're all Keynesians now".) In this country, that means the Federal government, which has sole control over the money supply. So why shouldn't it do a substantial part of that by sending money to the states -- including South Carolina?

In short, Sanford's not too tightly wrapped on these matters.
11.16.2008 12:46pm
A. Zarkov (mail):
William Oliver:

"People who do well do not do so by their own actions, and thus should not benefit from them."

This pretty much comes straight from John Rawls' Theory of Justice. In particular his second principle, part a.
a) they are to be of the greatest benefit to the least-advantaged members of society (the difference principle).
Rawls principle amounts to a maxmin reasoning. The best is that which maximizes the least. Thus a society is to be judged by how well off the least well off person is. He says this is the kind of world that everyone would choose to live in if they had no idea of what kind of life they would be born into.

In Rawls' world everything essentially becomes a matter of luck. If you are talented, you're simply lucky to have been born that way. If you work hard, then again you're lucky to have such a prudent nature.

There are many problems with Rawls' theory. I think the main is an assumption of extreme risk aversion. Humans are not that risk averse as to prefer the sacrifices necessary to achieve the maxmin outcome.

This is the philosophy behind Obama, who as far as I can tell has no original ideas.
11.16.2008 12:48pm
John Moore (www):
Arizona is spending vast amounts on a silly light rail system - in a city with a very low population density. I live relatively close to center city (compared to most - 5 miles) and I cannot imagine a case where I would find that light rail usable. Now Phoenix has its hand out for a federal bailout. I say - shut down the light rail project or sell it (to see if it has *any* real value).
11.16.2008 12:49pm
A. Zarkov (mail):
"Well, duh. That's because California's population and economy expanded. State and local government spending went from 20.45% of GDP in 1996 to 20.95% in 2006 ... basically flat."

Not the best metric. Better to compare spending increases to revenue increases. I don't have that data, but a comparison of California spending to other western states is here. Note that as a fraction of personal income California's spending has been increasing faster than personal income. California also suffers from demographic shifts that are eroding its tax base, but Sacramento refuses to recognize that.

It's time to think about these things in an analytical way instead of flinging out insults.
11.16.2008 1:02pm
Oren:
And we come to the eternal irony present in American politics -- those blue states with the highest per-capita Federal tax burden and lowest per-capita Federal spending agitate against their interests to tax and spend more. Meanwhile, the red state get far more in spending than they pay and yet lean politically towards cutting off that source of income. We have a huge system of wealth transfer from blue to red with the payers rooting for more and the payees demanding less.

Also, as I recall, the Maine legislature forbid the spending of a single dime to meet any of this RealID nonsense. Perhaps Sanford could introduce a bill in SC to do the same?
11.16.2008 1:10pm
Eli Rabett (www):
John Moore makes a typically short sighted observation. It has been shown that development follows transport, and that light rail systems form spines about which considerable development occurs. That, of course is without looking at what the actual projected ridership is.
http://en.wikipedia.org/wiki/METRO_Light_Rail_(Phoenix)
11.16.2008 1:10pm
Lior:
Effectively, the only way the Federal Government is "helping" anyone right now is by taking out loans for them, on the theory that the US government can get credit on better terms than those being helped. This may apply to private businesses, but I doubt this applies to US states, which have economies as large as many countries.
11.16.2008 1:13pm
Oren:
Zarkov, the main problem with California is that their revenue is mostly from personal income taxes which are uber-cyclic. Of course they put their spending into overdrive when incomes soared -- they had all this money and who could resist spending it?

Much as I don't like it, progressive taxation at the State level is just plain economically unsound until we invent a new kind of legislator that can save money during a boom. Maybe a system where legislators must budget with a 3-year averaged revenue instead of current revenue. Actually, that sounds about right.
11.16.2008 1:17pm
David Welker (www):
As far as those of you attributing extreme ideas to Obama, I would ask that you back that up with quotes not taken out of context.

Overall, Sanford clearly does not know what he is talking about. We don't want to "reward" California with Federal money when it, as was mentioned by above, pays more in Federal taxes than it receives in Federal benefits in contrast to South Carolina? It sounds to me like it is South Carolina, not California, that isn't pulling its own weight.

But, more to the point. Right now we really do need to stimulate the economy. Helping state and local governments avoid even more painful cutbacks is a fairly effective way to do that. Why we are at it, maybe we should put some conditions on any aid that require states to set aside funds in when the economy is hot.
11.16.2008 1:39pm
A. Zarkov (mail):
Oren:

In California the state can grab the surplus from cities that have been prudent enough to save for a rainy day. Thus Sacramento provides a perverse disincentive for fiscal prudence. "Oh you didn't overspend, thanks, we'll take that." Thanks to a proposition, the governor has to declare a state of fiscal emergency before they can start grabbing. Schwarzenegger has already done that. Hold on to your wallet.

Shortly after Schwarzenegger declared the state of fiscal emergency, he submitted a new, hugely expensive universal medical care proposal. That was too much for even the spendthrift Democrats and they turned him down.

This state is crazy and it gets crazier every year. I'm afraid that one day it will simply become a de facto province of Mexico.
11.16.2008 1:48pm
David Welker (www):

This state is crazy and it gets crazier every year. I'm afraid that one day it will simply become a de facto province of Mexico.


You are right that the state is a little crazy. I mean, with Proposition 13's two-thirds requirement to pass a budget, a fanatical Republican minority is continually pushing us into budget crises after budget crises. I am sure there will be a repeat performance next year.

Hopefully, with the passage of Proposition 11, the Republican side of the aisle will be forced to become more reasonable and moderate in the long run. I have my fingers crossed, but do not expect any instant miracles.
11.16.2008 1:57pm
David Welker (www):
crises = crisis

Don't even think of mocking my spelling! Okay, maybe I deserve it.
11.16.2008 1:59pm
JB:
David Welker,
Wait, what? You need a 2/3 majority to pass a budget, but can prohibit or legalize gay marriage with a simple majority?

That is appalling. I can't believe it.
11.16.2008 2:28pm
PersonFromPorlock:
Slightly OT but it's now almost sixty three hours after the op-ed was posted and the WSJ still hasn't published any comments about it. This isn't unusual with them. Does anyone else feel that their sluggish handling of comments shows a certain contempt for their readers' opinions?
11.16.2008 2:29pm
David M. Nieporent (www):
Sanford's answer to the first is just empty ideological posturing. His evidence seems to be that California increased its spending dramatically over the past decade.

Well, duh. That's because California's population and economy expanded. State and local government spending went from 20.45% of GDP in 1996 to 20.95% in 2006 ... basically flat. (2007 data is not yet available).
The problem is that your data has nothing to do with the topic. "Percent of GDP" is not a measure of spendthriftiness. The fact that one's income increases does not somehow imply that one is "supposed" to spend more. For a person, yes, consumption is a good, so more income can lead to more spending, up to a point. For a government, though, consumption is a negative, since "income" to the government is money out of the pockets of actual people. It's one thing to argue that a state's spending should increase in proportion to its population, since the cost of many state services is essentially per capita. But there's no relation between the size of the economy and the appropriate size of state spending.
11.16.2008 2:34pm
David M. Nieporent (www):
John Moore makes a typically short sighted observation. It has been shown that development follows transport, and that light rail systems form spines about which considerable development occurs. That, of course is without looking at what the actual projected ridership is.
It has been shown that light rail is pork for construction unions, that "projected ridership" has nothing to do with real ridership, which is always vastly lower, that it's economically unfeasible, that buses are much better for mass transit (but less popular because the construction unions don't benefit), that "development" doesn't follow transport, but development subsidies.
11.16.2008 2:53pm
theobromophile (www):
Meanwhile, the red state get far more in spending than they pay and yet lean politically towards cutting off that source of income. We have a huge system of wealth transfer from blue to red with the payers rooting for more and the payees demanding less.

Someone who is more knowledgeable can chime in, but I will note that you can't simply say, "State X gives out some amount of money, and gets 1.2 times that amount back." You also have a hard time doing a per-capita spending analysis, as there are states like Alaska, with a low population and a huge amount of land controlled and operated by the federal government.

Some states, in theory, get money that will benefit every state. Farming states, for example, get agricultural subsidies, which (again, in theory) benefit all Americans who purchase food at a more stable or less expensive price. You also have spending for things like roads, which are degraded quite quickly by 18-wheelers. Now, the residents of the flyover states don't directly benefit (or benefit very much) by the heavy truck traffic - it's not like all of the goods are staying in-state - but the spending on the infrastructure is allocated to that particular state.
11.16.2008 3:06pm
Tiger (mail):

David Welker,
Wait, what? You need a 2/3 majority to pass a budget, but can prohibit or legalize gay marriage with a simple majority?

That is appalling. I can't believe it.


Yeah, 2/3 vote required for budgets to pass. I think, though, that Prop 13 requires a 2/3 vote for a tax increase, while the 2/3 vote for budget approval goes back further than Prop 13.

But, yeah, the simple majority for an amendment seems pretty dangerous to me.
11.16.2008 3:07pm
pireader (mail):
David Nieporent wrote--It's one thing to argue that a state's spending should increase in proportion to its population, since the cost of many state services is essentially per capita. But there's no relation between the size of the economy and the appropriate size of state spending.

GDP can only grow in two ways -- a larger population or higher GDP per capita. As you say, government spending almost inevitably increases proportionately with population. Unfortunately, it also increases proportionately with GDP per capita.

That's because government spending mainly goes for services. The government must hire people to deliver those services; and as the economy-wide wage structure goes up, the state must pay its policemen, prosecutors, prison guards, physicians, teachers, tax collectors, etc. correspondingly more.

Of course, government services do achieve some productivity improvements. (I now renew my auto license tags online, for example.) But the government's core activities--policing, education, etc.-- haven't shown any great productivity advances, to my knowledge.

So yes, the government's spending must track pretty closely with GDP, if its going to maintain the same suite of services.

Of course, you may just be saying that you'd rather that the government provide fewer services to its citizens. Unfortunately, your fellow citizens (in California and elsewhere) seem to disagree with you.
11.16.2008 3:08pm
ShelbyC:

You need a 2/3 majority to pass a budget


Since the budget doubled in the past decade, maybe we need to make it 3/4.
11.16.2008 3:09pm
ShelbyC:
pireader -- you have any evidence that civil service salaries track the economy? I'd imagine they'd be among the least elastic.
11.16.2008 3:17pm
Oren:

It's one thing to argue that a state's spending should increase in proportion to its population, since the cost of many state services is essentially per capita. But there's no relation between the size of the economy and the appropriate size of state spending.

Why exactly not? A more affluent state can rationally chose (consistent with the will of the people) to spend more money in absolute terms on public goods and services.
11.16.2008 3:25pm
NickM (mail) (www):
California just passed a $10 billion bond to pay for the first stage of what would be (by legislative mandates in the authorizing legislation) the world's fastest high-speed bullet train. [Most rail experts are figuring that at least $50 billion will be necessary for construction of the full route, since the plan is to hit all the major cities.] It was sold to the voters as a way to reduce traffic congestion without raising taxes. I've driven between L.A. and Sacramento/S.F. Bay enough over the years to know that the long stretches through the Central Valley (I-5) and Central Coast (US-101) are among the most uncongested in the state.

Spend money foolishly, and then beg for more money. It's the American way.

Nick
11.16.2008 3:35pm
A. Zarkov (mail):
"California just passed a $10 billion bond to pay for the first stage of what would be (by legislative mandates in the authorizing legislation) the world's fastest high-speed bullet train."

This train will essentially compete with the airlines and passenger vehicles. Why would someone take the train instead of driving or using an airplane when you know the fare will be very high? If you take the train from (say) Sacramento to San Diego, what do you do for transportation once you get there? Obviously, you rent a car. So why not drive in the first place? In most cases it will come down to a choice of fly versus train. I haven't done a rough cost calculation yet, but I'll guess that the cost of a one way train trip between SF and LA will be on the order of $400. You either pay directly or through your taxes, but one way or another you will pay. I round trip fare on SWA was less than $100 the last time I flew to LA in 2006.

Yet CA voted for this waste of money. But CA has the third lowest average IQ of all the continental states.
11.16.2008 3:53pm
David Welker (www):

Yet CA voted for this waste of money. But CA has the third lowest average IQ of all the continental states.


Is there any reason to think that the people who voted against Proposition 1A had higher IQs than those who voted for it? I suspect not.

Overall, this sort of argument, which can be succinctly described as "insult those you disagree with" is both unpleasant and unpersuasive. Although, I probably must plead guilty to engaging in this practice from time to time.

I can get a little riled up too. But, I do not think it advances good conversation.
11.16.2008 4:12pm
David Welker (www):

Since the budget doubled in the past decade, maybe we need to make it 3/4.


I think that Republicans have been good enough at blocking budget as is. I honestly do not think that such a change would make much of a difference, because redistricting to create a maximum number of Democratic seats has allowed a minimum number of more extreme Republicans to thrive in very safe districts. Trying to get even a few Republican defections is very difficult.

What we need is some sensible and moderation from both sides, not more insanity. I would prefer if we passed a proposition to make it possible to pass a budget with a majority vote, but so far such attempts have failed. That doesn't mean we shouldn't try again, of course.

In the meantime, hopefully future legislative districts are drawn up in such a way that makes life difficult for more extreme Republicans even while probably increasing the total number of Republicans in the legislature. We will see how redistricting after Proposition 11 goes.
11.16.2008 4:21pm
first history:
California legislative Republicans would rather commit mass suicide than vote for a tax increase (I just wish they wouldn't make the state collateral damage when they do.) Their proposals include budget gimmicks like borrowing and accelerating tax collections that are just smoke and mirrors rather than real solutions.

What California (and the other 40-odd states in serious deficit) needs is some breathing room to make necessary reforms. Set broad reqquiremetns for the funds-creation of a rainy day fund, tax reform, etc. without getting too specific to allow for variety among the states. Like TARP, it's all how you describe it--they should have called it a "rescue," not a "bailout". Call aid to the states "revenue sharing," and credit a Republican with the idea--Richard Nixon.
11.16.2008 4:47pm
David Welker (www):

Call aid to the states "revenue sharing," and credit a Republican with the idea--Richard Nixon.


Good points. But I am not so sure about whether invoking the name "Richard Nixon" will get you anywhere. =)
11.16.2008 4:50pm
Bama 1L:
Accepting arguendo that light rail projects gain political support because of the construction contracts necessitated, don't constituencies besides unionized construction workers make money from such contracts?
11.16.2008 4:53pm
David Warner:
Hoosier,

"What I find interesting: Alexander Hamilton faced the same objection to his First Report on the Public Credit. Then, too, it was southern states that objected. Same old change."

Is there no difference between debt incurred fighting redcoats and debt incurred not fighting red policies?
11.16.2008 4:59pm
David Welker (www):

Is there no difference between debt incurred fighting redcoats and debt incurred not fighting red policies?


Whether there is a difference or not, it seems that certain Southern governors fail to grasp it.

In all seriousness though, I think the historical point is a little thin. South Carolina now and South Caroline over 200 hundred years ago are two very different places. It is sort of an amusing point, not one to be taken too seriously. At least I am guessing that is the author's intent.
11.16.2008 5:19pm
Not_so_fast:
@CrazyTrain: If senators were still chose by the state, and the earmarks were from senators, you may have a point.

But since the ratification of the 17th Amendment states have had no representation in the federal government, your point rings hollow. It is taxation without representation.
11.16.2008 5:20pm
David Welker (www):

But since the ratification of the 17th Amendment states have had no representation in the federal government, your point rings hollow. It is taxation without representation.


This makes little sense. Senators still look after the interests of their state, regardless. That Senator Voinovich of Ohio is the only Republican who has expressed much of an interest in a bailout for the auto industry is a case in point.

The idea that the only way Senators will represent their state is if they are elected indirectly by representatives is to elevate individuals serving in state legislatures over the rest of the people who actually live in the state. It is as if the only way the people of the state can be truly represented is if they do not vote.

Anyway, before direct election of Senators, often the primary thing on people's minds when they voted for state legislators was who would be selected for the U.S. Senate. Often, it was this issue that determined people's votes more than anything else.

Why do you think Lincoln and Douglas even bothered to give speeches and have public debates? It was not as if they were campaigning for votes directly. However, they were campaigning to get people to vote for members of the state legislature who would then select them to serve in the U.S. Senate.

So, it turns out that either way, the votes of the people had a big impact on who ended up in the Senate. But, you say, in one case that state is represented and the other it is not? That doesn't make a whole lot of sense.
11.16.2008 5:40pm
RPT (mail):
"Zarkov:

Coming to a theater near you soon-- the entitlement mentality meets reality."

Are you now coming our in favor of cutting defense spending, one of the biggest "entitlement" areas there is: no cut-no bid-no problem? If you run out of targets for your weapons, just create some new ones?
11.16.2008 5:45pm
A. Zarkov (mail):
David Welker:

You're right-- the later comment was insulting and unnecessary as I already presented a case against the the new train project. I'm only human like the rest of us, and slip now and then. So thanks for the jolt.
11.16.2008 5:54pm
Oren:



In the meantime, hopefully future legislative districts are drawn up in such a way that makes life difficult for more extreme Republicans even while probably increasing the total number of Republicans in the legislature. We will see how redistricting after Proposition 11 goes.

This is a problem the country over -- we need to reduce the number of safe districts so as to increase the number of moderates. Hopefully, we can also convince Congress-critters to assign committee chairmanships to less partisans folks.
11.16.2008 6:02pm
A. Zarkov (mail):
RPT:

"Are you now coming our in favor of cutting defense spending, one of the biggest "entitlement" areas there is:.."

I sure am. When have I ever advocated profligate spending on defense? Remember what Eisenhower said: "Beware of the military-industrial complex. I have seen too many military boondoggles to feel otherwise.

But let's remember the constitution charges the federal government with war responsibilities. If the feds don't take that responsibility no one will. It's also true that war and the threat of war acts to increase government power. I think the US should make the Europeans and others pay for their own defense. Do we really need troops in Germany to act as a trip wire for a Soviet invasion?
11.16.2008 6:02pm
Perseus (mail):
He also notes that a bailout would reward fiscally irresponsible states (e.g. California, which nearly doubled state spending in ten years) at the expense of those states that exercised greater fiscal restraint.

Agreed. Since the money isn't being spent on especially noble purposes, the message to states like California should be: Drop Dead (i.e. the crisis should provide the necessary pressure to finally get your fiscal houses in order).
11.16.2008 6:20pm
fortyninerdweet (mail):
John S; 11:13am. The problem with your suggestion - as wise as it may be - is that once a tax bite became substantial due to lowered prices legislatures like CA's would never permit the scale to slide back down when prices increased. Just not in their DNA to do things like that.

pireader; 12:46pm, No quibbles re: Sanford's pov, but to imply that CA's legislators haven't been fiscally imprudent is equivalent to believing Michael Moores flix, imo.

pireader; 3:08pm, Generally agree with your comments. One thing the state doesn't do, though, is be proactively thrifty taking on new tasks or revamping existing services. Example our prisons. Private companies have a record of delivering similar or even better services for far less money, but then the public employee unions wouldn't go for that, would they?

Not_so_fast; 5:20pm, Makes a good point. The 17th amendment might not have been the smartest thing our nation voted in. It did leave an un-fixed disconnect in several areas, not the least of which is the electoral college.

A.Zharkov; 5:02pm; I, too, wish to see others pay their fair share of world-wide "defense" activities. But do we want that bad enough to risk doing not quite enough when the chips are down? That's a sweaty issue, imo.
11.16.2008 6:47pm
Aleks:
Re: Getting rid of the REAL ID act would be a bad idea as it provides some deterrent to illegal aliens. Illegal aliens are a big, unnecessary and unjustified expense for California.

If that a justifiable reason for the act (which was sold as an anti-Terrorist measure), then the Federal government ought bear the whole cost of it, by issuing a national ID card, instead of piggy-backing all these security measures on drivers licenses. Last I checked, national defense and security were the responsibility of Washington. The tendency of Congress not to put federal money where its mouth is really does need to be checked. State DMVs should be exactly that: Departments of Motor Vehicles, not branches of Homeland Security, Immigration and Naturalization, Labor or Defense.
11.16.2008 6:59pm
David Welker (www):

State DMVs should be exactly that: Departments of Motor Vehicles, not branches of Homeland Security, Immigration and Naturalization, Labor or Defense.



I do not know enough about REAL ID to have an opinion on the wisdom of that effort.

However, I will disagree with this assertion in the abstract. If some function of government could more efficiently be performed by an existing agency or set of agencies, it probably makes sense to allocate the mission to them rather than create a whole other bureaucracy with overlapping functionality.
11.16.2008 7:07pm
David M. Nieporent (www):
That's because government spending mainly goes for services. The government must hire people to deliver those services; and as the economy-wide wage structure goes up, the state must pay its policemen, prosecutors, prison guards, physicians, teachers, tax collectors, etc. correspondingly more.
That's a small factor, yes. But you're double-counting; it's growth in GDP per capita, not GDP, that matters for that purpose.

But most of the spending on services isn't -- or it shouldn't be -- for salaries for people to provide those services. It's for the services themselves. And if states were being responsible, they'd be spending less on those services as the economy got better, because there would be less need for them. You'd need fewer prosecutors and prison guards, because as the economy got better, crime would drop. You'd need less money for Medicaid and social workers and welfare and housing subsidies and such, because more people would have jobs. Etc. The problem is that states don't do this; they use extra money as an excuse to hand out even more goodies to people, since they can do so without having to raise taxes.

And ordinary services don't cost more just because the economy is better; if people get richer and can afford luxury cars instead of compact cars, it doesn't cost more to process the registration for the former, or to inspect the former, or the like.
11.16.2008 7:20pm
David M. Nieporent (www):
Why exactly not? A more affluent state can rationally chose (consistent with the will of the people) to spend more money in absolute terms on public goods and services.
Certainly. But then it can't morally ask other people to bail it out because it chose to do that instead of saving money.
11.16.2008 7:21pm
Random Commenter:
"I think that Republicans have been good enough at blocking budget as is. I honestly do not think that such a change would make much of a difference, because redistricting to create a maximum number of Democratic seats has allowed a minimum number of more extreme Republicans to thrive in very safe districts."

And of course it never occurs to you that gerrymandering has the same effect on democratic districts: it allows a lot of extreme liberals to carry on with no worries about voter revolt.

Your attempts to hang California's fiscal problems on the decades-old republican minority is comedic.
11.16.2008 7:37pm
Allan Walstad (mail):
By all means, dump REAL ID. Actually, there's some reason to hope enough states will refuse to cooperate, to kill it.

I think the US should make the Europeans and others pay for their own defense.

Right on, A. Zarkov. Germany and Japan, among others, have the economic and technological capacity to assume (or re-assume) their rightful status as major powers. We've coddled them and walked all over their responsibilities for way too long.

Popular election of senators came up. This was a foolish tossing-aside of an important part of the system of checks and balances. Senators were to represent states through the state governments, while the House did so through direct election. The point was to enlist the natural tendency of state governments to guard their Constitutional powers against federal encroachment. Treaties are ratified by a super-majority of the Senate precisely to protect the powers of states, which are not mere administrative units of the federal government.
11.16.2008 7:39pm
David Welker (www):

Certainly. But then it can't morally ask other people to bail it out because it chose to do that instead of saving money.


Of course they can morally make such a request. And a majority of the Congress can morally grant or deny that request. We are one nation, not 50 little ones.

California already spends more in taxes than it receives in benefits. That is fine, because we live in a nation and the border between California and Nevada, for example, is not as significant as the border between Idaho and Canada.
11.16.2008 7:42pm
Allan Walstad (mail):

And if states were being responsible, they'd be spending less on those services as the economy got better, because there would be less need for them.

Right. Unfortunately, in the game of politics, when the economy booms you invent a whole bunch of new stuff to spend money on, and then when the economy goes down a bit, you raise taxes in order to meet expenses. That's the ratchet, or should I say racket. The idea of states being bailed out by the feds is sick on so many levels, not least of which that the feds themselves are broke.
11.16.2008 7:48pm
pireader (mail):
David M. Nieporent --But you're double-counting; it's growth in GDP per capita, not GDP, that matters for that purpose.



GDP = Population X GDP per capita

Government spending goes up proportionately with population (more people to serve)

Government spending also goes up proportionately with GDP per capita (service providers' wage level goes up)

Therefore government spending goes up propotionately with GDP

Don't see where I'm double-counting .... please explain further
11.16.2008 7:49pm
David Welker (www):

Popular election of senators came up. This was a foolish tossing-aside of an important part of the system of checks and balances. Senators were to represent states through the state governments, while the House did so through direct election. The point was to enlist the natural tendency of state governments to guard their Constitutional powers against federal encroachment. Treaties are ratified by a super-majority of the Senate precisely to protect the powers of states, which are not mere administrative units of the federal government.


Actually, you really should study history a little more carefully. You act as though it was all a carefully calibrated machine rather than a matter of power politics and compromise as a historical matter.

The big states wanted representation in a national legislature based on population. Small states wanted equal representation for each state, as was the case under the Articles of Confederation where business could only proceed by unanimity. The creation of a bicameral legislature with a Senate favoring the view of the small states and a House favoring the views of the large states (with each slave counting as three-fifths a free person for representation purposes) was nothing more than another of the many partially unprincipled compromises that the Founders were able to hammer out. We should no more thrust this compromise on a pedestal as some sort of perfect machine or the result of deep philosophy than we would the three-fifths compromise. While surely the Constitution is a philosophical document, many of its particulars are the product of particular political moments, compromises, and ordinary politics as much as or more than any deep philosophy.

What deep philosophy drove the Founders to decide that a slave would count as 3/5ths of a free person? What deep philosophy led them to say that the slave trade shall not be interfered with before 1808 but it could be afterward?

The Constitution is a deeply practical document that is the product of a particular political moment.

If you insist on wandering outside of your field of physics, at least know what you are talking about. Know what parts of the Constitution are more the product of compromise and the politics of the moment (which deserve less deference) and which have deeper philosophical roots (and which deserve more deference).

I would say that changing the way Senators are elected in the long-run was as much a part of the plan of the Constitution, as such change occurred through the very process that Founders, who knew they had not made a perfect document applicable for all time and all future generations, set up for amendment.
11.16.2008 8:05pm
Allan Walstad (mail):

Government spending also goes up proportionately with GDP per capita (service providers' wage level goes up)

Therefore government spending goes up proportionately with GDP

And down? If GDP goes up by 10% one year and down by 10% the next, state spending should do the same by your argument, no?
11.16.2008 8:09pm
David Warner:
Perseus,

"Drop Dead"

Funniest thing about that front page:

"Stocks Skid, Dow Down 12"

Tell me again about how free(r) markets suck.
11.16.2008 8:10pm
Allan Walstad (mail):

If you insist on wandering outside of your field of physics, at least know what you are talking about.

I'm not impressed by sneers substituting for arguments. But apparently it's the best you can do, so by all means continue to undermine whatever of substance you might have to say.

Of course the Constitution is a practical document. And it is a principled one. The concept of checks and balances runs throughout the history of discussion and adoption of the Constitution. Election of senators by state legislatures was part of that system.

The way slaves were counted was a compromise, and probably not one I'd have been willing to make. But there's a subtext to your mentioning of slaves, one which I recognize from many years of trying to have rational discussions with left-liberals, who frequently bring race into virtually any argument from out of the blue. It's a smear.
11.16.2008 8:26pm
Eli Rabett (www):
For better or worse race is part of just about any political argument in the US. Pretending it ain't there to spare your feelings is not on.
11.16.2008 9:01pm
Smokey:
The bullet train/pork barrel project in California is the stupidest idea to come down the pike in a long, long time. Zarkov has deconstructed the giant fiscal waste machine, so if I may take another tack regarding one of the local agencies also pushing the train, here it is:

The San Jose/Silicon Valley Valley Transportation Authority [VTA] is backed by a self-appointed group called the "Silicon Valley Leadership Council" [and their cronies].

These incompetent 'leaders' have saddled taxpayers with the VTA, which has a budget of $720,000,000 a year! Yet they are in deep financial trouble [a foretaste of the state bullet train wreck coming up].

The VTA used to hold competitive bidding for bus companies. Naturally the low cost provider would bid competitively, and would also pay property taxes.

But last year the VTA took over running the bus system itself, at double the cost. Now, drivers and managers are unaccountable, and transportation has gotten much worse. Which is to be expected, when the government decides it can run a business.

The VTA also runs a light rail project, the brainstorm of one Rod Diridon, who pushed the idea in the '80's [the local paper had a contest to name the trolley system. My fave suggestion: "Diridon's Urban Money Burner" -- D.U.M.B.]

Light rail systems NEVER attain anywhere near the projected ridership numbers, which are always based on outright lies. In VTA's case, the light rail system carries fewer passengers per dollar spent than any other large system. The reduced fares are subsidized by almost $6 per ride for every rider -- and thousands of free passes are given out each year, to try and keep ridership at minimal levels.

The VTA's government-run bus system ranks 368 out of 373 in the country. Even after taking in $720,000,000 a year, VTA is deeply in the red.

Eight years ago the VTA got a multi-billion dollar bond issue passed to connect BART [Bay Area Rapid Transit] from San Francisco to San Jose [about 45 miles]. Despite already spending the money, the VTA hasn't even gotten around to writing a plan for the BART connection yet. VTA's own CFO has issued a report stating that even if VTA canceled every other project, they would still run out of money and bonding capacity trying to connect BART to San Jose.

So in the past 8 years VTA has spent all the money for BART [and then some], and has now gotten yet another sales tax increase -- Measure B -- to do what it promised to do eight years and several billion dollars ago.

The VTA/BART situation is a preview of what is going to happen with the California bullet train earmark: a completely unnecessary train [R/T airline fares between San Jose and San Diego are less than $200, and travel will be much faster than in the 'bullet' train].

Government track and parking lots will be built on huge swathes of land that now pay property taxes; the trains will be run by the government, using unaccountable workers sucking up huge and costly benefits. Every aspect of the project will be far more costly than the projections, doubled and squared -- and it will all be based on vastly inflated, and completely unrealistic ridership numbers: why take a 3+ hour trip, when a much cheaper airline flight gets you there in 1 1/4 hours?

But Governor Arnold Schwarzenegger backs this giant pork barrel, and he explains his rationale here.
11.16.2008 9:10pm
Allan Walstad (mail):

For better or worse race is part of just about any political argument in the US. Pretending it ain't there to spare your feelings is not on.


a) Thanks for agreeing with me. b)My feelings are pretty resilient, so don't worry 'bout that.
11.16.2008 9:15pm
David Welker (www):

But there's a subtext to your mentioning of slaves, one which I recognize from many years of trying to have rational discussions with left-liberals, who frequently bring race into virtually any argument from out of the blue. It's a smear.


You really do prefer to address the strawman you wish to attack, rather than addressing the argument that is actually made, don't you? It is so much easier, isn't it? I am sorry if you consider the mention of plain facts that are quite relevant to the point to be made to be smears. That is your psychological problem, not mine.

Let me try again.

Amendments to the Constitution are as much part and parcel to the Founder's plan as any other part of the Constitution. To attack the Seventeenth Amendment is to attack the original Constitution. So, rather than bitching about the Seventeenth Amendment, maybe you should be complaining about the Founder's decision to allow amendments at all. Because, unlike you, the Founders apparently did not believe they had made the perfect document for all times and all generations.

If selection of Senators by state legislators was part of the imperfect system put in place by the Founders, then just as much so was a process whereby the Constitution itself, or the system originally in place, could be amended.

Overall, your argument against the Seventeenth Amendment (which approaches irrelevance) seems to amount to a raw assertion that this goes against the original plan (but changes to the original plan were also part of the original plan!) and some vague and unfleshed-out notion that states as entities have somehow been disserviced by this Constitutionally approved of adjustment by the People.

I will admit, overall, I am not impressed with you in particular. Given your earlier reference to Federal Reserve Chairman Ben Bernanke, Nobel Prize winning economist Paul Krugman, and United States Treasury Secretary Henry Paulson as "quacks," when they are all far more accomplished than you are now or ever will be, I do suppose I have lost a certain amount of respect for you.

It appears to me that you are too quick to spout off about that which you know very little. Maybe, just maybe, you should stick to physics. I am all for responsible cross-disciplinary research. But, I am definitely against arrogant statements by those who fail repeatedly to address substance and think non-concrete and vague references substitute for actual substantive discussion. I am against the arrogant statements of those who assert that superior men are "quacks," or who construct strawmen to attack when these strawmen obviously and clearly contradict plain text, or who make vague references about how the "public choice school" would prove the point they wish to make, but fail to explain how, or who makes clearly ignorant statements about the Constitution, or who assert that stating actual, relevant, and indisputable historical facts qualifies as smears. None of the above counts as quality dialogue.

The bottom-line is before you go on your little jihad and call people quacks when you are clearly not qualified to do so, you should think about the impacts on your own reputation. You would have been better off maintaining anonymity. I never called you out, instead hoping you would have the wisdom and good sense to slink away with your tail in between your legs rather than creating a permanent record of your ignorant arrogance on Google. I am neither impressed by your nasty demeanor nor your petty accomplishments in comparison to the "quacks" you feel you are qualified to dismissively insult.

And with that, I am through with you. As they say, you cannot roll in the mud with pigs for too long without getting dirty yourself.
11.16.2008 9:15pm
Allan Walstad (mail):

Amendments to the Constitution are as much part and parcel to the Founder's plan as any other part of the Constitution.

Agreed. But amendments might be sage or misguided. I opined that the 17th was misguided, and offered a rationale. Your response was the straw man.

As for the rest of your post, I kind of fazed out on the ad hominem, so if there was anything substantive in there, I'm afraid I missed it.
11.16.2008 9:27pm
David Welker (www):

I opined that the 17th was misguided, and offered a rationale.


I am sorry, I found your rationale to be so vague and fluffy as not to count as a real rationale. So, it is all about protecting the prerogatives of states as institutions? And what reason exactly do we have to believe that Senators directly elected by the People no longer represent the interests of their states? Especially in light of the actual historical reality that the people in the various states often selected their legislators BASED on who they would vote for to represent the state in the Senate? Is it really surprising that people would base their votes on the office they perceive to be more important? How far is that really from direct election of Senators? Also, did you address the systematic allegations of corruption that used to result before the Seventeenth Amendment? Also, if the Constitution was really all about protecting the institutions of the states as institutions, it is hard to understand why they would move away from the Articles of Confederation at all. It is quite clear that the Constitution is about much more than merely protecting the prerogatives of the states as institutions, as the Constitution in fact reduced those very prerogatives. Obviously, not completely. But, an informed observer arguing based on Constitutional structure would address this issue in a nuanced way.

Given the superficiality of your analysis, and your failure to address the obvious issues that anyone who knew what they are talking about would, I failed to count your "rationale" as a real rationale. And I suppose this is in part based on previous arguments where you apparently thought that vague references to the "public choice school" counted as argument and you thought that calling very accomplished men "quacks" counted as argument. It is hard to separate this argument, which I do not find impressive but probably would not react to as strongly if made by someone else, from your particular history.
11.16.2008 9:43pm
Brian K (mail):
that buses are much better for mass transit

don't tell this to the average chicagoan. the el is widely used and many prefer it to the buses.
11.16.2008 9:44pm
David Welker (www):

As for the rest of your post, I kind of fazed out on the ad hominem, so if there was anything substantive in there, I'm afraid I missed it.


I am glad that you disprove of ad hominen argument. Now here is a final question.

Does calling Ben Bernanke, Paul Krugman, and Henry Paulson "quacks" qualify as ad hominen argument????

For someone who so readily employs ad hominen argument himself, I am surprised that you are so easily fazed by small doses of it.

Perhaps you should admit that, at least, was a mistake. And something you would not have likely said under your real name as opposed to "Doc W."
11.16.2008 9:46pm
Allan Walstad (mail):
David Welker: I'm satisfied with the exchange as it stands.
11.16.2008 9:47pm
Smokey:
David Welker,

Hey, this is the internet, not tea and crumpets with the Queen. Hyperbole in making a point is pretty common around here. On rare occasions, it's possible I might even engage in it myself.

...just sayin'.
11.16.2008 10:02pm
David Welker (www):

I'm satisfied with the exchange as it stands.


Another example of your poor judgment.
11.16.2008 10:16pm
David Welker (www):

Hey, this is the internet, not tea and crumpets with the Queen. Hyperbole in making a point is pretty common around here. On rare occasions, it's possible I might even engage in it myself.


You are right. I must stop being such a shrinking violet! =)
11.16.2008 10:18pm
TokyoTom (mail):
Think the feds are going to be able to resist the opportunity to example their relative dominance vis-a-vis the states, by refusing to bail them out? Thus we see another example of federal regulation (this time, federal mismanagement of the financial system) creates incentives for further actions to remedy the unintended consequences of the initial intervention.
11.16.2008 10:58pm
David Welker (www):

Thus we see another example of federal regulation (this time, federal mismanagement of the financial system) creates incentives for further actions to remedy the unintended consequences of the initial intervention.


So, is the theory that the Federal government regulated the financial industry too much, not in the right way, too little, or what?

Also, since the Federal government gets all the blame when things go badly, does it get all the credit for the years that went well? Of is this a "blame the Federal government when things go badly" and "praise private industry when things go well" sort of analysis?
11.16.2008 11:08pm
Elliot123 (mail):
When companies get into trouble they lay off workers. Happens all the time. Perhaps it's time for a 10% or 20% decrease in state government labor. Layoffs are always a gerat opportunity to get rid of the deadwood.
11.16.2008 11:43pm
David Welker (www):

Layoffs are always a gerat opportunity to get rid of the deadwood.


I suppose that is the silver-lining.

The dark side of that is that this "deadwood" -- as you call these people who are now unemployed -- no longer spend money, have their cars repossessed, their homes foreclosed and often see their marriages and families fall apart. This obviously has negative effects on neighborhoods, crime rates, divorce rates, suicide rates, and so on.

One of the ironies of cutbacks in state government is associated cutbacks in law enforcement just when you would expect the crime rate to increase.

I think on balance, layoffs are better news in an economy that is thriving and are company-specific rather than in an economy where entire industries are suffering very serious problems. Especially since when it is the entire economy that is bad, it is not always the "bad employees" who lose their jobs.
11.17.2008 12:02am
Ricardo (mail):
In Rawls' world everything essentially becomes a matter of luck. If you are talented, you're simply lucky to have been born that way. If you work hard, then again you're lucky to have such a prudent nature.

As Steven Pinker pointed out, liberals and "Bell Curve conservatives" share this view that luck is the key to success, just in different ways. After all, if you accept that IQ is mostly genetic and that a high IQ is one of the most important predictors of success, since our genes are not under our control it stands to reason that luck is a big, if not the biggest, factor in success.

There are many problems with Rawls' theory. I think the main is an assumption of extreme risk aversion. Humans are not that risk averse as to prefer the sacrifices necessary to achieve the maxmin outcome.

As economists have pointed out for quite some time, humans are very risk-averse indeed when investing in the stock market. The stock market has a consistently higher rate of return over T-bills that cannot be justified by most measures of risk aversion. True, this doesn't justify the minmax assumption, but neither does it justify any simple way of inducing someone's aversion to risk through behavior.
11.17.2008 12:42am
Smokey:
Ricardo,

I've never bought into the argument that luck determines whether someone makes it in life. That claim is easily falsifiable.

The system of government makes all the difference. Capitalism results in: a) inequality of wealth, and b) enormous national wealth compared with statist systems.

Just look at North Korea vs South Korea. Japan vs China. Pre-1990 East Berlin vs pre-1990 West Berlin.

In a capitalist system, with property rights protected by the state, and general economic freedom, individuals make their own luck, and society becomes rich. Everyone benefits enormously [but not equally; that's the deal].

But when society starts redistributing the wealth on a massive scale, it kills the goose that was laying the golden eggs.

The bright side [to some folks] is that everyone becomes more or less equally poor. Or at least, the go-getters are brought down to the level of the layabouts, and society loses its dynamism.
11.17.2008 4:20am
A. Zarkov (mail):
Ricardo:

"After all, if you accept that IQ is mostly genetic and that a high IQ is one of the most important predictors of success, since our genes are not under our control it stands to reason that luck is a big, if not the biggest, factor in success."

That's true, but I think a high IQ is a necessary, but not sufficient condition for success. Pinker also stresses that other heritable personality factors contribute to success. In any case, Rawls has stacked the deck so as to make anything a matter of luck. Thus, if success is also the result of an individuals willingness to work hard, then he's lucky to have that too.

"As economists have pointed out for quite some time, humans are very risk-averse indeed when investing in the stock market."

On average investors are, and the aversion is asymmetrical to boot. The magnitude of the negative utility of a loss exceeds that of the positive utility of a gain. However, some if not many people are actually risk seeking. For example, in racetrack betting, the gamblers over bet the long shots to such an extent it creates an exploitable inefficiency in the "market" at the track. For example see the book by Dr Z. The risk seeking behavior at the track is actually rational from the point of view of utility. You make so little money with safe bets, it's hardly worth the time, and a win gives no rush. But a win at a long shot gives you big bucks and a big thrill. One has to go to the track to appreciate this.

Thrill seekers such as sky divers, mountain climbers etc also seem to show a form of negative risk aversion.

"The stock market has a consistently higher rate of return over T-bills that cannot be justified by most measures of risk aversion."

I think you mean the equity premium puzzle. I'm not sure this has anything to do with my argument against Rawls' theory of justice. But see the papers by Robertson and Wright on stock market valuation. I think if they're right the puzzle goes away, but check me on this.

There's no doubt people don't like risk. But surely many people would never want the dullness and lack of opportunity one gets in a Rawls-type world. It's the ultimate nanny state. Try working in a civil service shop sometime. The people tend to be dull and obsessed with their security to such an extent little gets done. It's a really boring experience.
11.17.2008 4:21am
A. Zarkov (mail):
Smokey's excellent examples demonstrate the Pareto principle, or the "80-20 rule." Namely 80% of the effects come from 20% of the causes. This principle seems to appear over and over in human affairs. It's the primary cause of income inequality. Ask almost any auto dealer and he will tell you that most of his sales come from very few salesmen. Most of the research papers get written from very few authors. This leads to social conflict. The achievers think of the non-achievers as free loaders, while the non-achievers think the system is unfair. This is why they hate the Bell Curve book so much.
11.17.2008 4:44am
loki13 (mail):
A. Zarkov,

I don't think that you can reduce Rawls in the way you do. If you view it simply as the veil of ignorance, I think you get more traction. In other words, make decisions without an a priori knowledge of who will benefit. We can see a simple example of this in the classic parents' dilemma- you have something that needs to be split among two kids. It often works best if one child splits the item, and the other child chooses. It's very reductionist to think of Rawls as "all success is attributable to luck." In fact, I would say it is wrong. A better way to view it is to think of how we would craft the rules (for example, legal rules) if we did not know what position we are currently in.
11.17.2008 8:35am
Hoosier:
loki

I don't think that you can reduce Rawls in the way you do. If you view it simply as the veil of ignorance, I think you get more traction. In other words, make decisions without an a priori knowledge of who will benefit. . . . In fact, I would say it is wrong. A better way to view it is to think of how we would craft the rules (for example, legal rules) if we did not know what position we are currently in.

But this is precise the weakness of Rawl's "veil of ignorance." Why should I agree to the rules Rawls suggests? Because, he says, of my own self-interest: Since I don't know what position I'll have in society, it is a good bet to support rules that will give me a fair shake if I turn out to be at the bottom of the social order.

But since the veil of ignorance doesn't actually exist, and thus I do know what my advantages are under the current rules, the same principle--self-interest--may very well dictate that I support different rules than I would have had I not known my position, or had I been in a lower status group.

Put another way, if self-interest is the decisive factor, Rawls gives no reason for those in positions of power to make any changes.
11.17.2008 10:39am
A. Zarkov (mail):
loki13:

"If you view it simply as the veil of ignorance,..."


That's the view I take. Now I realize that Rawls' philosophy is far more than the "veil of ignorance," but I think this argument is core to his theory of justice. He asserts that we should judge the justness of a society by how well off the worst well off member of that society is-- the max-min criterion. He then used the "veil of ignorance" concept to buttress max-min reasoning that everyone or most everyone would choose the max-min solution out of risk aversion. Perhaps I misinterpret Rawls, but that's how I see his argument, and I think it flawed.

The "veil of ignorance" concept has a kind of self referential quality to it. His imaginary agent is not yet even born and does not know how it will turn out and thus will opt for the max-min kind of world while in this state of ignorance. Of course the agent must have some degree of intelligence and consciousness to make such a decision, which in turn affects the decision.

Imaginary example. Suppose we have two societies A and B. In society A, 99.9% have a well being of 100. The others have an amount 0<= x < 100. In society B everyone is at x. Suppose you don't know which part of society a you will belong to. Which society would you choose? A or B. Obviously the decision is a function of x and the probability of being in the 0.1% of A. Call that probability p. Obviously is x is near 100 the decision is immaterial. Suppose x is near zero. Then p will will drive the decision. How one chooses is a function of p and x. Now suppose we randomize x, which brings us even closer to a true veil of ignorance. The obvious choice for the distribution of x is the uniform since this is the maximum entropy distribution-- maximum ignorance. In other words P[X= x]= 1/100. Going further we randomize p. Again the uniform. But why p instead of some function of p, such as the odds ratio (p/(1-p)). In this case I would argue for something called the "Jeffrey prior" which is invariant under a transformation of p. Now the agent will try to maximize his X. Finally we could change that 99.9% to another random quantity and repeat giving us a situation of complete ignorance. Rawls says to always choose B. Is that right? I will work out the answer today if I have time.
11.17.2008 12:06pm
Thorley Winston (mail) (www):
I honestly hadn't expected to see the 2012 presidential race start quite this early.
11.17.2008 12:48pm
Oren:
Zarkov, you analysis is interesting, so I'm voting in favor of seeing the rest of it (iow, you can figure my interest in the answer as a benefit of expending some more time on it :-)

As an aside, IMO, there is a much more powerful argument against the veil of ignorance. Namely, that we are all (to varying degrees) ignorant (in a totally different sense) of what social arrangements will produce what outcomes. IOW, the actual outcome of their arrangements might be quite different from how they imagined (and I think, this 'might' is an 'almost certainly').
11.17.2008 1:17pm
loki13 (mail):
Zarkov &Oren,

I still think you're missing an important element from Rawls' ideas. The veil of ignorance is just that- a conceit, but it gets to the heart of what we imagine 'fairness' to be. It's an elaboration on the old "Do unto others . . ." maxim.

It is useful in determining the assignment of rights (for example, in a legal dispute). Without going all L&E on you, one way to view the transaction is the right assignment should go to those who value the right the most, which would strongly be correlated with income (not taking into account marginal utility of money). Another would be to look at the assignment of the right ab initio from the veil of ignorance- how would the right be assigned if we did not know our own station in life, and the benefits that would accrue from it.

I still don't think this is an argument for 'all is luck' as much as it is an acknowledgment the different starting positions we have in life (inherited wealth, genetics) and given the different variables that we cannot control from the environment (e.g. our health) we should look for rights assignments that would protect those that are more unfortunate.
11.17.2008 3:02pm
Oren:
Loki, I don't mean to deny the conclusions of some of the VoI ideas, but the process seems unsound to me for the reason I specified earlier. To wit, under the VoI, participants in a society might opt for an arrangement that, when actualized, produces outcomes very different from what they imagined.
11.17.2008 4:26pm
Elliot123 (mail):
"The dark side of that is that this "deadwood" -- as you call these people who are now unemployed -- no longer spend money, have their cars repossessed, their homes foreclosed and often see their marriages and families fall apart. This obviously has negative effects on neighborhoods, crime rates, divorce rates, suicide rates, and so on."

Sure that happens. It happens when private sector people get laid off, too. Citi just announced 50,000. Most of them go find something else to do so they can avoid the ills you mention. I doubt there is any alternative that doesn't have some significant downside.

However, it is a bit strange to think a population getting hit with layoffs should continue to pony up so government employees don't have to share the same risks.
11.17.2008 5:41pm
David Welker (www):
Elliot123,

You really not responding to the point. You say that layoffs are a "great opportunity" I suggest that overall the costs of this "great opportunity" exceed the benefits. You aren't really responding to that point.
11.17.2008 8:36pm
Oren:
He is responding. Those laid off will find a more productive venue for their labor than their current employment. Continued employment of vast resources at GM is a misallocation as we've clearly demonstrated that they don't produce anything of sufficient value to justify their costs.
11.17.2008 10:25pm
David Welker (www):

Those laid off will find a more productive venue for their labor than their current employment.


I do not see how you can say that is necessarily true. Even when the economy is good, not everyone is able to find a "more productive" job. When the economy is falling off a cliff, the number of people in that situation increases.

The statistics are clear. Crime, divorce, suicide, and a variety of social ills increase during downturns. It is not because people who are laid off are suddenly (despite the fact that they had a job before) too lazy to look for another job or work nor is it because they suddenly find themselves in much more "productive" job.

Again, he didn't address the issue, and either have you. The issue is that layoffs are not some sort of bed of roses where everyone finds more productive work. They aren't these "great opportunities" to eliminate "deadwood."

And, I really have to question, from a moral perspective, someone who chooses to describe other people as "deadwood." Is that a superiority complex, or what?
11.18.2008 1:08pm
Elliot123 (mail):
"You really not responding to the point. You say that layoffs are a "great opportunity" I suggest that overall the costs of this "great opportunity" exceed the benefits. You aren't really responding to that point."

Sure I responded to your point. I said layoffs have happened before in many industries, and the people have adjusted by finding something else to do. Dislocation was short term. State employees can do the same thing. There's nothing special about them.

Do costs exceed benefits? I doubt it. In one case we keep the unnecessary deadwood forever, in the other we get rid of it and let it find other productive activity.

"I do not see how you can say that is necessarily true. Even when the economy is good, not everyone is able to find a "more productive" job."

Of course it's not necessarily true. So what? Past experience has shown it happens over and over again when people get laid off. I agree that's not a guarantee, but we don't live in a world where anything is guaranteed to be necessarily true.

It's also true that not everyone will succeed in finding new employment. OK. Do we sit on our hands for the rest of time because not every one will succeed? If we did we would still have elevator operators and buggy whip makers because if we eliminated those jobs not everyone would find a more productive job. Maybe some will find something just as productive, and others will find something less productive.
11.19.2008 12:30am
Elliot123 (mail):
"You really not responding to the point. You say that layoffs are a "great opportunity" I suggest that overall the costs of this "great opportunity" exceed the benefits. You aren't really responding to that point."

Sure I responded to your point. I said layoffs have happened before in many industries, and the people have adjusted by finding something else to do. Dislocation was short term. State employees can do the same thing. There's nothing special about them.

Do costs exceed benefits? I doubt it. In one case we keep the unnecessary deadwood forever, in the other we get rid of it and let it find other productive activity.

"I do not see how you can say that is necessarily true. Even when the economy is good, not everyone is able to find a "more productive" job."

Of course it's not necessarily true. So what? Past experience has shown it happens over and over again when people get laid off. I agree that's not a guarantee, but we don't live in a world where anything is guaranteed to be necessarily true.

It's also true that not everyone will succeed in finding new employment. OK. Do we sit on our hands for the rest of time because not every one will succeed? If we did we would still have elevator operators and buggy whip makers because if we eliminated those jobs not everyone would find a more productive job. Maybe they will find something just as productive, others will find something less productive, and others will camp on the front steps with a six pack of Colt-45.

"And, I really have to question, from a moral perspective, someone who chooses to describe other people as "deadwood." Is that a superiority complex, or what?"

Deadwood is a colloquialism for people who collect a paycheck for doing little work, or people who are employed where they are not producing. Those who produce are clearly superior to those who just collect the check. It's really not complex. Never heard the expression before? Maybe it would be more sensitive and caring to refer to them as "under utilized human resources?" But I doubt it. Walk through any plant or office and ask who the deadwood is. Everybody will understand, and probably agree on the nominees.
11.19.2008 12:42am
David Welker (www):
Elliot123,

All I have to say is this. You have a bad attitude and are clearly not a very nice person. You could improve in both areas.

I would say that the average piece of "deadwood" that you refer to probably has less to do in terms of self-improvement than you do. So, maybe you should look in the mirror before criticizing others.
11.19.2008 1:52am
Elliot123 (mail):
Harsh, very harsh.
11.19.2008 2:03pm