The Cost of Redistribution

This piece by Ezra Klein got me thinking. He argues that the wealthiest among us have "stolen" the productivity gains of the economy is bad and we should do something about it. I have always wondered how proponents of this line of thought propose to get people to pay $7 for a Big Mac because we raised the minimum wage to $11/hour, but that's neither here nor there.

My main question today is, is it not possible that the reason our economy has grown and recessions have gotten gentler over the past thirty years or so is that very inequality? Is it not possible that Paul Krugman's Great Compression is what was holding the economy back? Government redistributions have a cost; $1 in taxes costs the economy more than $1, and I propose that all that money we were spending on bureaucrats instead of people who actually produce something is the difference between the 50's and today. I'd love to see some serious analysis of this idea -- I'm not equipped to do it but it passes the smell test with me.

This blogging thing is hard. . .

I have been writing a lot of questions lately and getting ready for some fake quiz bowl next week, so apologies to the three or so of you who read this blog. You might want to use the RSS feed.

This post from Working Life hits home with me as someone who lost a job a few years ago and was eligible for (but never got; I got a new job first) TAA assistance. I am a little confused by the folks that are so against free trade. I am not sure how they think that their middle-class lifestyles will be maintained if you make the economy less productive than it already is, by closing the door to your customers. The United States is the world's largest consumer market, and every business in the world wants to sell their stuff here, but no government is going to open the doors to U.S. companies if our doors are closed to theirs.

So, I'm not sure how we save middle class jobs if we roll back free trade. If the American market isn't big enough to buy the things you want to sell (at high wages, remember -- prices will have to be raised), then all those great manufacturing jobs that we've created are going to go out of business in a hurry. I don't care how little the CEO makes -- no company that doesn't make money will employ workers at any wage for very long.

In response to the distorting effects of farm subsidies that one commenter brought up, you won't see me defend them. That, and the very interesting post about education that the sociology professor posted, I'll deal with another day.

Krugman steps a bridge too far

The hopes of Cleveland rest on crafty veteran Paul Byrd tonight, as he takes on the vaunted Yankees. Hopefully, they can slap the Yankees' Wang around again.

I always read Paul Krugman; he gets on my nerves but he's smart and hard to argue with. He went a bridge too far today:

People claim to be shocked by Mr. Bush’s general fiscal irresponsibility. But conservative intellectuals, by their own account, abandoned fiscal responsibility 30 years ago. Here’s how Irving Kristol, then the editor of The Public Interest, explained his embrace of supply-side economics in the 1970s: He had a “rather cavalier attitude toward the budget deficit and other monetary or fiscal problems” because “the task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority — so political effectiveness was the priority, not the accounting deficiencies of government.”

"People claim to be shocked by the Bush administration’s general incompetence. But disinterest in good government has long been a principle of modern conservatism. In “The Conscience of a Conservative,” published in 1960, Barry Goldwater wrote that “I have little interest in streamlining government or making it more efficient, for I mean to reduce its size.”

Let's review, shall we? Bush is:

1. the heir to a movement that is really uninterested in decreasing the size of government, that is only using that claim as a hammer to win elections


2. the heir to a movement that is not interested in good government, only in decreasing its size

People claim to be shocked at the Bush administration’s attempts to equate dissent with treason.

As opposed to moveon.org equating non-dissent with treason, or an attempt at enforcement of fiscal responsibility as an active preference for keeping children without health care? I don't always the support the tone of the Bush administration, but blaming one side for the political discourse that has been endemic for years, and , indeed, is on display in this very column is disingenuous at best.

Oh, and if you think Iran-Contra was a rogue operation, rather than something done with the full knowledge and approval of people at the top — who were then protected by a careful cover-up, including convenient presidential pardons — I’ve got a letter from Niger you might want to buy.

Do you really honestly think that if there was any "there" there, Lawrence Walsh wouldn't have found it? How much was spent on that investigation?

You keep that flame of hate alive, Paul.

First Monday

Here come the Supremes -- and as we turn to the month on the calendar where eight (well, nine, until tonight anyway) cities are focused more on other groups of nine contesting the baseball playoffs, the Supreme Court will begin its session today. Many big cases are on tap; for the best coverage anywhere, take a leap past Linda Greenhouse at the NYT and go straight to the recently redesigned SCOTUS blog. If the law is as interesting to you as it is to me, you'll enjoy the read.

Which brings me to my main point for today. I have no brief for the current crop of Republican presidential candidates, except for McCain, who probably won't win. In fact, if it ends up being

Giuliani vs. HRC, there isn't much difference on policy positions and on intangibles I would probably prefer Hillary.

But, I would have to vote for Rudy in that case. The most important difference is that Rudy will appoint justices to the Supreme Court who will respect the Constitution and the other branches of government for the next 20 years. Hillary will appoint justices who will rewrite the constitution to achieve their policy objectives. That is more important than anything else, in my opinion.

Everybody go read this!

It's really, really good stuff on economic misconceptions that plague voters.

(Hat tip to Greg Mankiw.)

They Signed

The UAW and GM have apparently come to agreement on a new contract, ending a day-and-a-half strike. Terms weren't disclosed, but are believed to contain some job security concessions in exchange for the formation of a VEBA.

I am not sure what will become of the VEBA, but it is hard to see that being a good deal for retirees. The only way that this saves GM any money is if it's underfunded -- so, by definition, if it's a savings for GM it's going to run out of money as happened at Caterpillar.

Then again, the VEBA could be funded more or less fully (70% is the figure that's been batted around, which is close to full funding as some of the obligations of the fund haven't actually been incurred yet), which makes it simply a means of removing uncertainty from GM's books, and making Wall Street happy with little effect on the actual size of the obligation.

Watch this space -- as the details come out it'll be interesting to see what happened, and if the contract is ratified.

No Guarantees

Sorry I was gone, I was busy celebrating the 2007 AMERICAN LEAGUE CENTRAL DIVISION CHAMPIONS!!!!!! See you at the Jake for the ALDS!!!!!!!

(Sorry about that, I let my emotions get away with me for a second.)

You may have noticed that the UAW went out yesterday. It seems that one of the more important issues is job security. I'm not sure they're thinking this through all the way. You can't get a guarantee of job security besides producing a product at a price people will pay for it. If you do that, you don't need a guarantee. If you don't, no guarantee will save you.