Monday, July 30, 2012

A customer is not providing a subsidy

In today's paper, Dan Bice reports that Obama critic Ken Dragotta has obtained government contracts. I suppose that some will believe that this is ironic or revealing.
Sorry. I can't see it. 

Here's the story. Dragotta has been publicly critical of President Obama's now infamous "you didn't build that" speech. Dragotta seems to believe that he and his colleagues - and not the federal government - built his business, Systems Engineering and Automation Corporation.
But, it turns out, that Dragotta's company has gotten contracts to provide machine parts for the Department of Defense. Hasn't he benefited from government largess? Isn't he a hypocrite?
No, he hasn't. No, he isn't. At least not because he got some government contracts.

The import of the President's remarks - no matter how you read them - is that people benefit from government and that this somehow obligates them to the state and gives it a form of "claim" on their success.

On one level, this is, as others have pointed out, banal and uncontroversial. No one disputes that there are goods and services - national defense would be one - that are best provided by the government. It is well and meet that people pay taxes to pay for them.

If that is all the President meant, his comments are completely irrelevant to any issue in the Presidential campaign. No one is calling for the abolition of government or the elimination of taxes. Paul Ryan's budget, for example, does no more than seek to return federal spending to a level that is more in keeping with its recent historical average.

The reason that the remarks have drawn fire is that - even when taken in context and given a forgiving reading - they do three things. First, they express disdain for success in business, mocking those who believe that their success came from working hard or being smart. Second, they misunderstand the role that public goods play in individual success. We all go to school and use roads. We don't all build thriving businesses. Finally, they suggest that someone who builds a successful business got something that he or she didn't "pay for" and, therefore, owes the state something - something even more than his or her share of the costs of roads, schools and other public goods. In other words, the claim of the state is open ended and limited only be the sufferance of the majority.

Whether that the last contention is true, government contracts are certainly not an example of government larges. Mr. Dragotta' business presumably received those contracts because he offered the best deal on the parts that the military required. He got those contracts because he earned them.
I have purchased an iPod, iPhone and iPad. I download music from iTunes. But I didn't build Apple and Apple doesn't owe me anything. I did it no favors. I paid for products that I thought were worth the price.

As did the Department of Defense when it purchased parts from Systems Engineering and Automation Corporation.
If Mr. Dragotta was arguing that the government ought not to exist or that it shouldn't build the submarines for which his parts are required, he's have some explaining to do. But, as far as I know, that was not his point. The fact that he was able to provide a product that the government wanted at a price it was willing to pay does not mean that the government "built" or has a claim on his business anymore than Apple owes me some free stock.

Cross posted at Purple Wisconsin.

Thursday, July 26, 2012

In favor of saving taxpayer's money

In last Sunday's Crossroads section, Steve Walters wrote an article about decreases in state and local employment. I was struck by the following statement attributed to Laura Dresser, a labor economist with _ I'm sorry but its true - a left wing think tank embedded in the University of Wisconsin. (As always, I say this by way of description. Knowing that a speaker has a perspective doesn't meant that we ought to dismiss what they say.)

Asked about the impact of losing 18,800 government jobs in Wisconsin, Dresser said, "That's shrinking the economy."


What struck me is the use of the transitive verb, i.e., the notion that by reducing government employment we have "shrunk" the economy from some state that it would otherwise have occupied.

That could be true but  doesn't determining whether it is so require knowing a lot more than government employment levels?

Here's the problem. The state is not like the federal government. It can't borrow money from China to finance current operations. While politicians have gotten good at accounting tricks that balance the day of reckoning, it must balance the budget. Whatever level of employment it maintains must be paid for. Paying for government jobs requires - you guessed it - taking money out of other parts of the state economy - in this case, from taxpayers.

Now, that might be a good thing to do. It might even lead to economic growth. The efficient provision of needed roads, education, fire protection, etc. can be essential to a healthy economy. There are even people who might argue that, under certain circumstances (not all), public employees would spend more money than taxpayers and this will boost economic demand. (Count me as skeptical about the how often this is true and whether we can even know when it is true or have the state "manage" demand in this way.)

But to simply say that reducing government employment and allowing taxpayers to keep the money that would have gone to pay them 'shrinks" the economy strikes me as wrong. As I have written before, saving the taxpayers money is not a bad thing.

Cross posted at Purple Wisconsin.

Friday, July 20, 2012

So it begins

At about 5 this morning, my wife told me about the Colorado shootings. (She gets up earlier.) She told me of reports, perhaps unconfirmed, that the gunman shot a three month old baby. I really don't have the vocabulary to describe how horrible this is.
But eventually it dawned on me. Someone is going to try to make political hay out of this.
Sure enough, ABC News' Brian Ross rushed to the forefront reporting that someone with the shooter's name seemed to be a member of the Colorado Tea Party. Although the network admitted that it did not know if if the tea party member was the same guy arrested for the shooting, George Stephanopoulos gasped. This, he said, may be "significant."
Turns out that the report was incorrect. Ross and ABC News have retracted the suggestion and apologized.  Bbut here's the thing. Whether James Holmes turns out to be a right wing psychopath, a left wing psychopath or an apolitical psychopath doesn't matter. The operative term is psychopath. How he chose to justify his murderous impulse is of no great moment. The rationalizations serve the impulse; they don't create it.
I appreciate the Grey Pomposities of the Commentariat may not choose to understand that. But it doesn't matter if he's a tea partier or a member of the Occupy movement. Someone does not decide to gun down a theater of people because they hear intemperate rhetoric - something, incidentally, that seems to be spread among all political groupings. A violent nut does not reason from false premises to the conclusion that he should murder a bunch of people.

Reason has nothing to do with it. The kind of pathology that leads to mass murder has deeper roots. The environmental movement doesn't own the Unabomber. The political right is not responsible for Timothy McVeigh. The left isn't to blame for Charlie Manson or Lee Harvey Oswald
I could go on. It wouldn't matter if - as appears not to be the case - the shooter was an illegal immigrant. While it's too early to know for sure,  the incident probably tells us little about, on the one hand, gun control or, on the other,  concealed carry in public places. It is a tragic event, but it's not a political event.

Cross posted at Purple Wisconsin.

Tuesday, July 17, 2012

Bound for nothin'

Over at National Review Online, Lee Habeeb reflects on the centennial of folk singer Woody Guthrie. Woody, alas, was something of a  communist who performed and his signature song, This Land is Your Land, was intended as a diatribe against private property. Guthrie wrote it as a response to Irving Berlin's God Bless America. Woody, apparently unable to endorse its sentiment, was enraged by Berlins' anthem.

History's verdict appears to be with Berlin. I can't recall singing "This Land is Your Land, during a seventh inning stretch.

Habeeb writes about a verse of the song - often omitted although I have heard it a number of times - that is a direct attack on property rights.

There was a big high wall there that tried to stop me,
A great big sign there said, “private property”;
But on the back side, it didn’t say nothin’;
That side was made for you and me.
Pete Seeger - who has sung that verse for years - croaked it out with Bruce Springsteen at President Obama's inauguration. But that simply reinforces the notion that history has been unkind to Woody.
Today's tribunal of the proletariat, the aforementioned Boss, has a net worth of $ 200 million. You can be sure that the signs around his estate down the Jersey shore or 200 acre farm don't "say nothin'."

Whatever frisson the Boss got by singing Truth to Power apparently doesn't extend to off stage life. Woody's socialism has become something of a period piece - trotted out as nostalgia by people who couldn't imagine having to live by it. To quote the prophet, Bono, "don't believe in riches, but you should see where I live."

Of course, as recent history tells us, even discredited ideas can come back. This Land is Your Land  is a catchy little sing along. It's animating philosophy is not a tune we can dance to.

Monday, July 16, 2012

No, actually, we spend quite a bit on schools

One of my guilty pleasures is Sunday evening on my deck with a glass of wine and the New York Times. I don't agree with everything I read (that's the point) but sometimes there is a truly astonishing statement.

For example, there was this piece by Shamus Kahn, a sociology professor at Columbia. In the course of arguing against the notion of meritocracy, he writes the following:

The narrative of openness and talent obscures the bitter truth of the American experience. Talents are costly to develop, and we refuse to socialize these costs. 
Dude, really?

He means more than the cost of education (more on that later), but he  means that as well. The notion that we "underfund" education is a staple of the Amreican left. But it is hard to square with the facts.

The US is at or near the top of the developed world in per capita spending on education. Even as a percentage of GDP, we are at or above the OECD average. (Needless to say, we don't achieve results commensurate with our investment.)

What we spend has been steadily increasing. Relying on government sources, the Heritage Foundation reports that:

Between 1994 and 2004, average per-pupil expenditures in American public schools have increased by 23.5 percent (adjusted for inflation). Between 1984 and 2004, real expenditures per pupil increased by 49 percent.[11] These increases follow the historical trend of ever-increasing real per-student expenditures in the nation's public schools. In fact, the per-pupil expenditures in 1970-1971 ($4,060) were less than half of per-pupil expenditures in 2005-2006 ($9,266) after adjusting for inflation.[12
Again, increased spending has not resulted in increased learning.

We appear to socialize the bejesus out of "these costs." Kahn, perhaps hedging against the truth, goes on to say that the development of human potential requires more than a well-supported school. One needs a "a safe, comfortable home and leisure time to cultivate the self."

Apparently, we must socialize everything.

Cross posted at Purple Wisconsin.

Wednesday, July 11, 2012

The Obama economy?

One of the most maddening things in our political discourse is the indeterminacy of macro-economic arguments, i.e., the nature and extent of government policy on the economy. One of the dumbest things we do is to assume that the President (or a Governor) has the ability to control - and, therefore, to "run" the economy.

This doesn't mean that public policy doesn't affect the economy, only that the impact is more attenuated and confounded than we think.

So what are we to make of this chart, posted by Harvard economist Greg Manikw, showing labor force participation?

One thing we can say is that there seems to be little support for the notion that Bush era tax cuts tanked the economy. The onset of the recession seems to have been well after they went into effect and, in fact, the years following their implementation were marked by rising employment. Maybe you can argue that the recession was the result of cumulative deficits caused by lower tax rates and increased spending (Bush 43 was a spender), but you'd need to find your support elsewhere.

But conservatives and liberals will read the chart differently with respect to Obama administration policies. Conservatives - and I admit this is my view - will find evidence that Obaman stimuli didn't work. The recovery has been historically anemic and it looks like Obama spent huge sums of money for shovel ready projects that did not exist and stimuli that did not stimulate.

Defenders of the President can take two approaches. The first is to say that it stopped the decline. The chart provides some superficial evidence for that but there are at least two problems. One is that it would be necessary to know how much of the 2009 stimulus package was spent in that year - before the decline abated. The other is that downturns inevitably bottom out. The administration did not expect the package to stabilize employment but to increase it. That did not happen to any material degree.

The second ploy is to criticize the President from the left - an attack that is unlikely to drive voters into the arms of Romney. On this view, the problem is that the stimulus - as humongous as it was - needed to be larger. The only problem with what didn't work is that we needed more of it.

If both of these arguments seem like matters of faith - susceptible of neither proof or disproof - it's because they are. Both seem implausible to me but I don't think I could prove them to be wrong.

What I do know is that - fairly or not - this is a tough record on which to run for re-election. If Obama is re-elected, it will be historic. Presidents tend not to be re-elected with numbers that look like this.

Cross posted at Purple Wisconsin

Monday, July 09, 2012

ObamaCare - it whirls - it twirls - it hops - or not.

I was intrigued by Guy Boulton's article on what appear to be wildly conflicting characterizations of what ObamaCare "will do." He reports on various explanations for this, including claims by some that the administration has "failed to sell" the plan and others who blame our contentious political environment.

The argument that "we just haven't explained things well" is a time-honored dodge in American politics. It is almost always wrong. The number of speeches given by the President in support of the new law is exceeded only by the number of rounds of golf he has played. He's selling. The public is not buying.

It is certainly true that our political environment is fraught with contention, although I'm less certain that this is anymore true today than it has been at many times in our history.
I'd suggest that one of the reasons that we can't agree on what ObamaCare "does" is because no one really knows.

The Affordable Health Care Act is - and I date myself here - a Rube Goldberg machine on steroids. For those of you who are unfamiliar with him, Goldberg was a cartoonist who drew far fetched and complicated devices that would accomplish simple things - say peeling a potato - in convoluted ways.

ObamaCare is an enormously complex contraption built on a series of assumptions and deferred decisions. It assumes that one can force insurance companies to cover everyone at a price largely unrelated to the risk presented by an insured -  if only everyone would buy insurance. It presumes that everyone will buy insurance if only we can impose a penalty - no, a tax - that is not as high as the policy will cost. It gambles that more employers will provide health insurance and that the cost of a health insurance policy can be lowered if only we mandate that polices must cover more with less cost sharing and if only we can penalize - er, tax - employers who fail to provide these more expensive policies - again, at a level that is less than the cost of purchasing the policies.

It asks us to assume that Medicare costs can be reduced by appointing a panel of experts who will "do stuff" that won't involve rationing care. What is that stuff? No one knows.

As Mona Charen recently wrote, ObamaCare is a 2700 page law that creates  "159 new boards and commissions; more than $500 billion in new taxes (and counting); the Independent Payment Advisory Board, a rationing board whose decisions are unreviewable by the courts and practically untouchable by Congress itself; restrictions on religious liberty; Medicare cuts; affirmative-action mandates for medical and dental schools; huge new authority over one-seventh of the U.S. economy for the secretary of health and human services, and open-ended regulations of the way doctors and others perform their jobs."

In her book, The Truth About Obama Care, Sally Pipes writes that the Affordable Health Care Act contains "a dizzying array of rapidly moving parts. Some whirl clockwise, others twirl counter-clockwise and even more leap up and down like pogo sticks." Putting aside how we might attribute which movement to which provision, the point is that the law contains numerous provisions that could prove disastrous if they don't go together "just so" and others designed to do contradictory things that it is hoped will come out "just right."

But it's worse than that. Writing in the Claremont Review of Books, Charles Kesler writes that Nancy Pelosi's infamous statement that we must "pass the bill, so that we know what is in the bill" is a misnomer. Reading the bill tells you precious little about what will actually be done.Most of that is left to subsequent rule making.

And it gets even worse. The Affordable Health Care Act was passed in 2010. Almost all of its provisions were designed not to go into effect until after the President runs for re-election this year - in 2012.
When does that ever happen? Here we have what we are told is the biggest and bestest reform ever. It is so good that we better not let the public experience its many blessings until after President Obama is safely re-elected.

Why do you suppose that is? Here's a hint. It wasn't because the Obama administration thought that a more rapid implementation of ObamaCare goodness would make the 2012 campaign too easy. It isn't because they wanted to give the Republicans a break so as to make the election more "sporting."

In light of all this, is it any wonder no one can agree on what ObamaCare "will do?"

Cross posted at

Recusal and the individual Justice.

The Wisconsin Supreme Court is in the news again, splitting evenly in its review of an order by Justice Michael Gableman declining to recuse himself in a case in which a law firm (but not the individual lawyers) which represented him in a disciplinary proceeding represented one of the parties. He also declined to recuse in another case in which his individual lawyer was involved but which arose well after the representation concluded.
In both cases, the argument for recusal was based, at least in part, on the fact that the firm provided its services on a contingency basis. It did not charge Justice Gableman and could be paid only if it prevailed and was awarded fees pursuant to a seldom used fee shifting statute. It is likely that the fee award would have required legislative approval.

So what did the Court split over? I think its fair to say that the division was over one serious issue - albeit one that was resolved prior to this case - and one that is not as serious.

Let's start with the latter first. In cases such as this, an individual Justice must  decide whether he  believes that he can decide the case impartially. Everyone agrees that the full Court can review that determination for the limited purpose of determining that it happened, i.e., that the Justice involved  considered the issues and decided he could proceed. In this review, however, the full Court does not "second guess" the Justice, i.e., it does not decide whether or not his decision was right, only that it was made.

Three Justices decided that Justice Gableman did so. The other three said, essentially, that they could not tell. With all due respect, their argument isn't very persuasive. It rests on the following.

The motion to recuse Justice Gableman was based, as I wrote, on the nature of his fee arrangement with the firm representing him. In his order denying the motion to recuse, Justice Gableman, in reciting the basis for the motion,  characterizes it as an predicated upon the fact that "Michael Best &
Friedrich firm was involved in the cases and had previously represented me.”

Chief Justice Abrahamson, writing for Justices Bradley and Crooks, thinks this a fatal flaw because the actual basis for the motion was that Justice Gableman " received allegedly free legal
services from Michael Best." Thus, according to this group, Justice Gableman "deliberately or accidentally" mischaracterized the basis for the motion and may not have considered the actual arguments made by the party seeking recusal.

One might say that "free legal services' is - deliberately or accidentally - not a complete and accurate description of the free arrangement at issue. But I am sure  that no omission was intended. I am also confident that Justice Gableman understood the nature of the arguments being made for his recusal and, in fact, made clear that he based his decision on "the circumstances of the case ... and the submissions of the parties."

To be sure, he did not expressly address the particulars of the fee arrangement, but no one thinks he was obligated to do so. In fact, the Chief Justice herself writes that "somewhat ironically, Justice Gableman’s Order might have passed muster had he referred to Adams’s allegations generically as “the allegations stated by the petitioner.”

In other words, he would have been OK had he not said anything about why he was asked to recuse himself and simply said that he had considered the request and denied it.

And that's just what he did.

To my eye, reading Justice Gableman's broad and generic description of the basis for the party's recusal motion as reflecting - or even suggesting - a failure to understand them or to consider the party's arguments is cutting the loaf too thin. I think he got the point. He just didn't think he ought to recuse.

Should the Court have decided whether he was he right? This gets us to the second - and more serious, albeit settled - issue. A majority of our state Supreme Court is committed to the position taken by the United States Supreme Court. They do not believe that a majority of the Court has the power to order a brother or sister Justice to recuse. On this view, it does not matter whether he was right - only that he made a subjective determination of whether he should or should not proceed.

There are strong arguments in favor of such a position. I think it is right about 99%of the time. I may, however, disagree with the majority when there is an argument that the failure to recuse amounts to a violation of litigants' due process rights. But that is, as the United States Supreme Court recently made clear, a very rare circumstance - one that was certainly not involved here.

Cross posted at Purple Wisconsin

Wednesday, July 04, 2012

Nothing "great" about Roberts' opinion

Yesterday we returned from a family trip to Disney World. Hadn't been down there since I took my son in the early '90s. Now we took him, his wife and two of my grandsons. I'm afraid I've changed more than the Magic Kingdom. Something in that is humbling.

On the plane down to the Happiest Place on Earth, I wrote this op-ed for the Milwaukee Journal Sentinel. One morning, before trekking the Animal Kingdom, I wrote more about the need - and potential - for a limiting principle at the Federalist Society's newly launched SCOTUSreport blog where I have been asked to contribute.  The point is this. If the limited view of the Commerce power endorsed by the Chief Justice and four other members of the Court has any meaning, it cannot be so readily undercut by  a capacious view of the taxing authority. The latter needs a limiting principle that the Chief Justice did not articulate but did suggest.

It is for this reason that the op-ed in Monday's paper by law professors Vikrim and Akhil Amar is unpersuasive. I appreciate that it sets forth the conventional 'liberal" view, i.e., that the Chief Justice was somehow "wise" in deferring to a piece of legislation in which the President had invested "substantial capital." The authors suggest that he has done something like Chief Justice Marshall  in Marbury v. Madison, asserting the Court's authority to say what the law is while avoiding a confrontation with the executive by giving the latter what it wants - for now.

But there are two problems with this view. The first is that it is not clear that Roberts has protected the Court's interest. He was able to avoid a confrontation only by adopting a view of the taxing power that threatens to undercut his view of the commerce authority and the constitutional scheme it reflects.

The second is that Marbury was decided in 1803 and this is 2012. We are well beyond the time in which the Court's authority to say what the law is was controversial. Rather than strike a blow for judicial independence, Roberts - in at least giving the appearance that he took a dive - undercut it. This was not a step forward for the Court, it was a step back.

Having said that, I do think it's a step too far to castigate Roberts' as a "liberal." I think he got too cute by half but I don't expect him to suddenly become something that he has never been.

Thank God for that.

Cross posted at Purple Wisconsin.