Paul Krugman is Super-SMRT, And Other Observations: a Long-Promised Fisking

His Krugman-ness in the NYT:

Mark Thoma sends us to the new Journal of Economic Perspectives paper(pdf) on optimal taxes by Peter Diamond and Emmanuel Saez. It’s a tough read (I’m still working on it myself), but there’s one discussion that I think helps make a useful point about current political debate.

Useful to whom?

In the first part of the paper, D&S analyze the optimal tax rate on top earners. And they argue that this should be the rate that maximizes the revenue collected from these top earners — full stop. Why? Because if you’re trying to maximize any sort of aggregate welfare measure, it’s clear that a marginal dollar of income makes very little difference to the welfare of the wealthy, as compared with the difference it makes to the welfare of the poor and middle class. So to a first approximation policy should soak the rich for the maximum amount — not out of envy or a desire to punish, but simply to raise as much money as possible for other purposes.

I was going to say "optimal for whom?" but Paulie K. kindly spells it out: the "optimal tax rate" is the optimal tax rate for the government. It maximizes the revenue of the state, and it's ability to engage in "other purposes." That phrase, however, is not so clear: what are these "other purposes"? How well are they performed? How well is that performance even measured? If the people decide that the government no longer needs to perform them, can they get their money back?

The White House Censors Ford Ad

The Detroit Free News has the details: (h/t: Is This Blog On)

On the one hand, Ford is not anywhere near as squeaky clean as it like to present. From the article:

Ford did seek a line of credit from the feds, borrowed billions under a government program to "retool" its plants and effectively failed first. That's why it recruited a superstar CEO from Boeing Co. and gave him some $23 billion in borrowed money to save the Blue Oval from bankruptcy.
Or it would have taken the money, too.

So their reticence about taking the money was circumstantial, not principled. And to an extent, the White House feels like they made things easier for Ford, too.

On the other hand, screw the whole ugliness of this. The day a car company can't lash out against its competitors because the President doesn't like it is not a great day for liberty. Because after all, Ford still doesn't have GM's gubmint-gay-run-teed advantages:

There's no help from American taxpayers to help lighten its debt load, giving crosstown rivals comparatively better credit ratings and a financial edge Ford is working diligently to erase all on its own.
There's no clause barring a strike by hourly workers amid this fall's national contract talks with the United Auto Workers — a by-product of the taxpayer-financed bailout that General Motors Co. and Chrysler Group LLC retain until 2015.

Hmmm....the government legally disbarring a union from striking, to benefit a major corporation, for the "common good" of the whole country. There's a word for this...anyone, anyone?

NYT: Sarah Palin May Not Be Crazy

h/t: Insty

Anand Giridharadas sayeth the unsayable, and discovers the real class warfare behind the Tea Party:

Ms. Palin may be hinting at a new political alignment that would pit a vigorous localism against a kind of national-global institutionalism.On one side would be those Americans who believe in the power of vast, well-developed institutions like Goldman Sachs, the Teamsters Union, General Electric, Google and the U.S. Department of Education to make the world better. On the other side would be people who believe that power, whether public or private, becomes corrupt and unresponsive the more remote and more anonymous it becomes; they would press to live in self-contained, self-governing enclaves that bear the burden of their own prosperity.

Unfortunately, he ascribes this to Palin in particular, and not the Tea Party in general. But hey, baby steps.

I am the Wrecking-Ball Right

There's a good line in the movie L.A. Confidential, after the second-plot-point fight between Sgt. Bud White, played by Russell Crowe, and Guy Pearce's Lt. Edmund Exley. Exley has discovered that the three black men he arrested for a shooting at the Nite Owl restaurant, in which an ex-cop was killed, were innocent. He recieved a promotion for his work on that case, but now he wants it re-opened.

"The Nite Owl made you," says White. "You want to tear that down?"

"With a wrecking ball," replies Exley. "You want to help me swing it?"

And the enemies become allies.

I've thought of nothing else since I looked at Robert Reich's "The Rise of the Wrecking-Ball Right". Most of the article is but strawmen assembled by anecdote, but the closing paragraphs sums up the basic meme that many on the left have been and will be adopting this coming election season:

Secession of Southern California

The usual write-up in the LA Times (h/t: Memeorandum):

Accusing Sacramento of pillaging local governments to feed its runaway spending and left-wing policies, a Riverside County politician is proposing a solution: He wants 13 mostly inland, conservative counties to break away to form a separate state of "South California.''

This occasionally happens on the Eastern Shore of Maryland, and for much the same reasons.

"Secession proposals are just ways of thinking about California, and are also ways for people who feel neglected get the attention that they deserve," said USC historian Kevin Starr, who has written extensively on California. "It's never passed, and it will never pass. It's been up to bat 220 times and struck out every time.''

Ah, but it only needs to work once.

EJ Dionne Doesn't Know What the American Revolution Was About...

Because, if he did, he'd know that if we were back in Boston in 1773, he'd be a Tory.

The American Revolution was not merely directed against monarchy. In the 169 years that the Thirteen Colonies existed, not a single monarch ever set foot in any one of them. No monarch ever made himself personally noxious to the American people.

What the American Revolution attacked was arbitrary authority, those "multitudes of new offices" that act beyond the scope of any public consent. That we have an elected Congress does not instantaneously legitimize whatever that Congress may decide to do. That is what the Founders understood, and what the Tea Party understands: that any government becomes illegitimate the instant that the people so decide.

The levels of taxation do not matter if the people no longer wish to pay them. Vague, self-serving remonstrances about measures for "the public good" do not matter if the people consider them contrary to their their own good. Popular rule does not mean merely elections, it means a government in the role of a servant, not a parent. As soon as those in office start believing they know the public good better than the public, then they have exceeded their brief, and it is the right and duty of the people to alter or abolish said offices.

Because a little Revolution every now and again is a healthy thing.

49 States Permit Concealed Carry! Except They Don't.

Everybody's all excited that Wisconsin passed its Concealed Carry Law, with the accompanying statistic that it joins 48 other states, leaving only poor Illinois the ugly girl at the party. As Frank Fleming puts it:

Not surprising that Illinois is the last total hold out on conceal carry. When you have whole cities run by criminals, last thing you want is honest citizens being armed.

Unfortunately, like most statistics, this one is hogwash. How do I know this? Because I live in The People's Republic of Greater Baltimoria Maryland, where concealed carry is marginally more legal than medicinal marijuana.

Here's the skinny:

The "may issue" is more often "no way". The categories for "may issue" are: making deposits; receiving money or cash flow; professional activities like doctors or pharmacies; correctional officers; former police officer; private detective and personal protection. For personal protection there must be documented evidence of recent threats, robberies, and/or assaults, supported by official police reports or notarized statements from witnesses. This state also requires permits for body armor.

For all practical purposes, that means no concealed carry. Let's not get all worked up in our triumphalism, shall we?

I Always Liked Lamar Alexander...

Niche tax breaks targeted; Senate kills ethanol credit

Alexander was instrumental in bringing this subsidy down. Quoth he:

“At a time when we are borrowing 40 cents out of every dollar that we spend, it is a good time to take a hard look at unwarranted tax breaks, and one appropriate use of those funds is to reduce the deficit,” Alexander said Thursday.
“I am looking at energy tax breaks. I am opposed to permanent subsidies for energy as a general matter. I am in favor of jumpstarting new technologies such as electric cars, helping the next few nuclear plants get off the ground, but I am opposed to, for example, a permanent ethanol subsidy and a permanent subsidy for windmills,” Alexander added.

If it needs a subsidy, then it doesn't work.

GOP Applies the O'Rourke Circumcision Precept

"You can take 10% off the Top of Anything."

It would be nice if they were going to slice everything quickly. It would also be nice if they were ready to slice whole departments from the executive branch. But I'll take half a loaf.

If you don't get the reference, you need to read Parliament of Whores. Or any O'Rourke for that matter.

P.J. O'Rourke on Atlas Shrugged.

I had begun to consider ol' P.J. a bit of a relic, semi-retired like Lord Kitchner before WWI. But of late he's been doing yeoman's service, first deftly cutting Amy Chua off at the knees:

You might think that Amy Chua is a fascist pig. She wrote a previous book, World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, so she is.

And now, he updates Ayn Rand more successfully in a few sentences than, one suspects, the filmmakers will two movies:

An update is needed, and not just because train buffs, New Deal economics and the miracle of the Bessemer converter are inexplicable to people under 50, not to mention boring. The anti-individualist enemies that Ayn Rand battled are still the enemy, but they’ve shifted their line of attack. Political collectivists are no longer much interested in taking things away from the wealthy and creative. Even the most left-wing politicians worship wealth creation—as the political-action-committee collection plate is passed. Partners at Goldman Sachs go forth with their billions. Steve Jobs walks on water. Jay-Z and Beyoncé are rich enough to buy God. Progressive Robin Hoods have turned their attention to robbing ordinary individuals. It’s the plain folks, not a Taggart/Rearden elite, whose prospects and opportunities are stolen by corrupt school systems, health-care rationing, public employee union extortions, carbon-emissions payola and deficit-debt burden graft. Today’s collectivists are going after malefactors of moderate means.

The Inner Party always has privileges. This is a point that we wingnuts need to make louder over the coming year: that progressivism primarily benefits those who can afford to pay for it.

There's life in the old boy yet.

There's Another Solution....

A crusading Clerk of the Circuit Court (Frank Conaway, who's running for mayor) stands up for a man who's been fighting for 12 years to keep his house from a variety of lawyers who have purchased the tax lien on his house, charged him rent, and filed duplicitous records.

In other words, the property owners rack up hefty interest charges on the debt, while the lawyer who bought it can then bill them for essentially selling the obligation back to them, with some legal fees tacked on. In the end the owner ends up paying thousands of dollars in legal fees and interest for what amounts to a dollar-value several times the original debt.

However wretched this kind of tax-farming is, whatever court case and whatever new ordnance Conaway has in mind, there are a couple of ways this could be prevented:

1. Create a settlement system that allows the city to collect tax liens in a timely manner, as by monthly payments.
2. Charge less in property taxes.

Is the government so incompetent that it can't even collect its own taxes?

Preach, Brother

Pezman Yousefzadeh:

I long for the day when arguments in favor of farm subsidies will be viewed with the same disdain as are arguments that the sun revolves around the earth.

Geocentrism, as Ptolemy designed it, was far more sophisticated. No special pleading required.

If You Can Find the King, You Can See Him...

Utah Gov. Gary Herbert just spent eight months trying to get the Depatment of Health and Human Services to let him take the State's Medicaid paperwork online. He finally had to appeal to President Obama.

"We tried for eight months to get the waiver," says Herbert. HHS delayed and delayed and delayed -- and then finally said no. "The denial we got back from the secretary of HHS was by e-mail, of all things," Herbert says, pausing a second for the listener to take it in. "The irony is rich."

To his credit, Obama immediately saw the worth of the idea and got the desk jockeys to okay it. But the whole episode displays everything the Right hates about Big Government: the delays, the inadequate responses, the self-serving hypocrisy. What the Left fails to understand is that these things are natural, and unavoidable parts of any bureaucratic process.

Bureaucracies exist to enforce, not to innovate. Office-holders are not empowered to make decisions, but rewarded for complying with them. HHS could not - literally could not - make the change Herbert asked for, because no one of sufficient authority told them that they could. It doesn't matter if they're officially allowed to make such decisions; in practice they will make the decisions that will create the minimum of ripples.

It reminds one of a French peasant hiking his way to Versailles and getting permission from the guards to enter, finding the King, and asking his permission to build a bridge over his stream, because the local Count wouldn't let him and the Bishop was indifferent.

America isn't supposed to work this way. We aren't supposed to be bowing in tender supplication to the arbitrary whims of our emperor and his eunuchs. We're supposed to be a free people. But freedom is messy; and our aspiring eunuch class likes things neat and tidy.

Well then, Cui Bono?

John Carney at CNBC takes us to school on "regulatory capture":

Pennell asked whether MERS was worried about an investigation by the Office of the Comptroller of the Currency. The general counsel’s reply was a stunning admission—basically MERS isn’t worried because it is convinced that the government regards it as too important to be sanctioned for misconduct.

As Leona Helmsley might have put it, regulations are for the little people. They exist not to rein in the powerful, but to protect them from competition.

I Love the Smell of Disco in the Evening. It Smells Like Victory.

One of the standing lines from the Right since Obama's rise has been that he is Carter in blackface. Instapundit, and myself, have long been of the opinion that Carter II is about the best we could expect from Obama. But he might mean something different from what I mean.

Carter's great virtue from a conservative point of view was his complete impotence, an almost adorable inability to come to terms with the challenges of his time. This had nothing whatever to do with his intellect. James Earl Carter, Jr. graduated from Annapolis and studied nuclear physics; such men are not without grey matter. Rather, he persistently misconcieved what the country the times needed and wanted.

And why was this good? Because by 1978 it was arguable, and by 1980, obvious. A sea change could and did occur in the American political landscape because the country had percieved that the New Class had failed to provide what it had promised. Conservative success in 2012 depends in no small part on a similar perception.

As P.J. O'Rourke once put it, after we get Carter, we get Reagan.

Trains are For Nerds.

When I was a young fellow, I had a weekly commute from Philadelphia to Monmouth  by way of a particularly painful combination of AmTrak and NJ Transit. I did this because I didn't have a car, and I didn't have a car because I was still figuring out costs and other such things. It's all part of being 21 and out in the wide world for the first time.

On one particular Sunday rehearsal, I wasn't able to get off the NJ Transit train at my stop, because I sat too far back in the train, and the doors weren't opening. So I had to get off at the last stop, and try to figure out how to get to my corporate hotel room from there. This was 1998, before cell phones were attached to everyone's hip, so I had to use a phone card to get in touch with my hotel. I had to wait an hour before the hotel could manage to get a car and driver out to where I was.

Within a few weeks, I'd purchased a crappy old 1986 Lincoln Mark VII. I totalled it within a matter of months and had to buy another car, but whatever. I was never going to endure that agony again.

And that's why I roll my eyes whenever proggies get themselves all worked up over public trains. Trains work only when nothing else is faster or more convenient than they are. Such instances are as follows:

Tommorrow.

I feel like Tommorrow means something, and I feel like it doesn't. It seems to me that we have but one final chance to pull back from the abyss, from the slow strangling descent into a New Class-managed Dark Age. On the other hand, even the forlorn hope of Dem-Plosion will result in nothing but the opportunity to slowly slip the Progressive Leviathan's grip. That crazed radical Paul Ryan, the man who's out of his mind, is planning on taking the next 75 years to restore us to fiscal sanity.

Given the high that the Democrats experienced 2 years ago, I don't know how the GOP can claim a mandate for their more radical (and necessary) plans. It might not at all be possible to forestall the utter and complete collapse of legitimacy.

The people are sick of Democrats. They're sick of Republicans, too. They're sick of "independents". They're bone-weary of Congress, the White House, the lobbyists, the activists, bureaucrats, the media. Everyone but the army can go to hell as far as most voters are concerned.

If that keeps up, then some tommorrow down the road, the other shoe will drop.

The Taxer we Raise, the Broker we Get

The Chinese have had this concept called the Dynastic Cycle for some time: a predictable rise and fall based on human nature and the inherent errors of monarchial government. A family rises to power, becomes corrupt, and falls. Time both seals later emperors in tradition and blocks them from the awareness of what they need to be. The result is the belief that they need do very little.

Monty, over at Ace of Spades:

Governments the world over are discovering that the river of money is not endless. That seemingly-inexhaustable mountain of wealth has been turned into an ocean of debt that will take decades to pay off. The spendthrift habits of the Western nations will put burdens on our children, and other generations not yet born, that should outrage us as a people. We are investing in the old rather than the young, and are punishing risk-taking and entrepreneurship rather than rewarding it. Our tax regimes seem to be deliberately crafted to kill innovation and long-term thinking. (What does "legacy" mean if the wealth I have accumulated in my life cannot be passed on to my children or heirs, but is instead eaten by the all-consuming government?) Young people -- young families -- are the foundation upon which Western Civilization is built. Neglect them, overburden them, cheat them, and you are committing societal suicide.

The premise of democracy is that the people, who live in the world and market, are far closer to reality than a prince sealed off by decorum and thick castle walls. That premise is about to be tested.

Read the whole thing.

UPDATE: "I need teens to be having more kids, pronto! Legitimate, illegitimate, I don’t care — somebody’s got to pay my Social Security."

The Essayist #20: The Right of Revolution

An oppressed people are authorized, whenever they can, to rise and break their fetters.
-Henry Clay

Every revolution contains within it something of evil.
-Edmund Burke

       With which of these two elegant quotations would the average person agree? The difficulty of the question becomes more apparent the longer it is considered. In the West, where the American and the French Revolutions constitute the birth-cries of the modern age, we feel an obligation to assent to the former. Yet any serious study of the French, Russian, or even the American Revolutions will compel us to give at least credence to the latter. We may shrug it off by retorting that revolutions are not made with rose-water, but this is the more persuasive with the understanding that whatever revolution we live under need not be repeated and will not be undone. In other words, we may ignore the blood of our birth so long as we need not be born again.
       But is revolution permanence? Have we established political structures so rooted in truth as to be past changing? To an extent, democracy is justified on answering, “yes” to this question: when the people rule, they need not revolt. But it is hardly a novelty to point out that majority rule can be tyrannical; James Madison pointed this out repeatedly. And if a majoritarian tyranny comes into existence, a revolution could surely be justified in destroying that democracy. Couldn’t it?
       Or could it?
       This essay will argue that every political system exists not for its own sake, but to protect a certain value that its framers held as essential to justice and order. This may seem obvious, but consider again its implications with regard to our current and beloved political ideal: democracy is not an end in itself, but a means to protect society. If it fails in that end, it may be reformed, altered, or even destroyed. No system of government is absolute; every state has an escape clause.

In Fairness to Rand Paul...

...there is a downside to public accommodation laws. They often create a "damned if you do, damned if you don't" situation.

How did a civil rights principle meant to aid African Americans and others who suffered grievous discrimination for generations come to protect the “right” of Neo-Nazis to parade their Nazi wardrobes in a privately owned restaurant against the wishes of management? The short answer is that legislation and its interpretation doesn’t develop from a coherent set of moral principles, but instead based on who is able to persuade the legislatures and the courts to adopt the principles they prefer. The principle involved in Alpine Village case appears to be hostility to the rights of private property owners, not “civil rights.”

Read the whole thing.

UPDATE: Apparently the Libertarians have decided that Rand Paul is insufficiently pure.

The Ultimate Libertarian.