Thursday, September 30, 2010

Economist v. Tea Party

The Economist (in the person of its America-desk essayist, Lexington) casts a baleful glance at the Tea Party's reverence for the Constitution.

WOULDN’T it be splendid if the solutions to America’s problems could be written down in a slim book no bigger than a passport that you could slip into your breast pocket? That, more or less, is the big idea of the tea-party movement, the grassroots mutiny against big government that has mounted an internal takeover of the Republican Party and changed the face of American politics.

There is something to this, of course. But Lexington gets a few things wrong, too:

...[T]here is something infantile in the belief of the constitution-worshippers that the complex political arguments of today can be settled by simple fidelity to a document written in the 18th century.

This is simply a straw man, nothing more. Of course the Constitution doesn't contain the answers to all our problems. The point the Tea Partiers are making is twofold: first, that the Constitution is the ultimate law of the land, a meta-law, so to speak, that forms the skeleton from which all our other laws and governmental institutions draw their authority, and that that framework has been increasingly ignored over the past century; second, that returning to Constitutional principles would help restrain or even roll back encroaching government, in particular federal, control over our lives.

Lexington points out that the solution to the question of whether gays should marry is not contained in the Constitution, as if this is some indictment of it, or reason we should ignore the document. The Constitution is not meant to answer such questions, of course. It is meant to give us a framework within which we answer them. So when the judicial branch arrogates legislative power to itself, as it has in this and many other modern controversies, Constitutionalists are likely to object. It isn't that the answer is necessarily objectionable (although that is often also the case), but that the way in which it was determined was illegal and weakens the framework in the future.

But it isn't only Lexington's legal/philosophical analysis that is awry. The historical analysis also comes up short.

[The Tea Partiers] say that the framers’ aim was to check the central government and protect the rights of the states. In fact the constitution of 1787 set out to do the opposite: to bolster the centre and weaken the power the states had briefly enjoyed under the new republic’s Articles of Confederation of 1777.

The Constitution of 1787 certainly had the effect of bolstering the executive, but it is also designed to balance the powers: state against federal, legislative against judicial against executive. It's certainly true that Madison and his compatriots had states' rights firmly in mind when crafting the document, and the Tea Partiers are absolutely accurate to argue that a primary reason states have lost so much power is because of unConstitutional abuses.

Finally, Lexington argues that, since we can't know what the founders would have thought of the modern welfare state, or recognized its institutions, we have no choice but to ignore their document. This is disingenuous at best. One reason we have the country we have, one reason it became so unrecognizable to the founders in the first place, is because of Progressive steamrollering of the founding documents. It's perfectly fair to see a restoration of respect for the Constitution as one way to roll back some of those changes.

The modern progeny of the Progressive movement have zero respect for the Constitution. They see it as no impediment at all to the furtherance of government control of our lives, and there are any number of videos showing Nancy Pelosi, Barney Frank, and other Democratic bigwigs baldly asserting as much. Conservatives are not revolutionaries at heart; turning back the clock on a century of Progressive changes (some of which, especially in the field of civil rights, we should keep) is too massive a movement to undertake overnight, and is politically impossible anyway. But to roll back a few things (Obamacare being target number one), to restore a sense that there is resistance to the growth of government: these are practical goals that the Tea Party can achieve. Raising the stature of the Constitution in the minds of the public can only help them do it.

Wednesday, September 29, 2010

Obamacare Wipes Out Health Care For Children

Matthew Shaffer lays out the case for why Obamacare was responsible for wiping out the market in child-only health insurance policies.

Insurers say the blame for their withdrawal lies not with them, nor even with the Obama administration’s general desire to extend health coverage, but rather with a single, hastily written provision of Obamacare. As the bill was being negotiated, insurers accepted that it would prevent them from denying coverage to those with pre-existing conditions, but they assumed that other means of managing risk — such as pricing, co-payments, and restrictions on coverage — would still be available. So insurers were surprised to discover that the law essentially required full “guaranteed issue” and banned price discrimination across the child-only market, regardless of clients’ risk profiles.


[Health Care for America Now (HCAN) communications director Avram] Goldstein thinks that argument is misleading. “When the industry expressed reservations about the rules, the Obama administration accommodated them,” he explains. “HHS Secretary Sebelius and her staff added in the ability for insurers to create open enrollment periods, so that a child who suddenly developed a health problem could not just rush over and buy a policy that would be guaranteed issue. Instead you have to say during the year, when you don’t know if you’re sick, whether you’ll enroll. They tried to accommodate insurers.”

This is true, but insurers still have good reason to be skittish. [America’s Health Insurance Plans] explains insurers’ uncertainty with a thought experiment: Suppose twelve different insurers each had an enrollment period in a different month of the year; then parents could still wait until kids got sick to purchase insurance, because they could simply pick the insurer that was enrolling that particular month.

Shaffer doesn't quite connect the final dots, though. The basic problem is that the goal behind setting up an open enrollment period is at odds with that of providing health care for all. Suppose a parent wants to sign up a kid for a child-only policy. If there are many open-enrollment periods scattered throughout the year (from different insurers), then adverse selection allows the parent to wait until the kid is sick before signing up. If there are few open-enrollment periods, though, then the kid may have to wait an arbitrarily long time before getting covered.

It's a teeter-totter: when one side goes up the other goes down. You can attempt to balance the tension between the two, but you cannot resolve it.

UPDATE: I forgot to link to the article in the original posted. That oversight has been corrected.

Painting Yourself Into a Corner

There are riots in Brussels today as Europeans protest austerity measures by the EU and its national governments. Their "argument", such as it is, might seem reasonable: that the recession was caused by banks pushing the envelope, not by those citizens being affected by austerity, so somehow the austerity measures aren't "fair".

But how do they think governments got so flush in the first place? It was certainly due, at least in part, to a booming economy caused by banks pushing the envelope. During boom times, tax revenues is up. But you have to expect a bust eventually (unless you believed that late '90s bunk about the "end of the business cycle"). Governments didn't save up for the rainy days to come: not just European ones; the U.S. and certain states (I'm looking at you, New Jersey, and don't think I haven't noticed you, California) are just as guilty.

So here's the conundrum. Governments get rich because of an unsustainable bubble they tacitly encouraged. Social spending grew to match revenues. When the bubble burst, tax revenue fell and the increased spending suddenly blew massive holes in budgets worldwide. So austerity measures were necessary to close the holes. Now the people who benefitted from increased spending are pissed: their lollipops are being taken away. But what's the alternative? Current budgets are unsustainable, so where's the revenue to come from? You could raise taxes, but that risks killing the geese that lay the golden eggs.

You could target banks, extract as much tax revenue from them as possible, and enforce regulations and laws to prevent future bubbles. But that runs the same risk: if those banks run out of innovative options, tax revenue from them will wither.

What's happened is that we've painted ourselves into a corner. The only way to get out is to take that first unpleasant step onto the wet paint.

Tuesday, September 28, 2010

Funny to the Left of Me, Angry to the Right

Heard on NPR a few minutes ago: A guest on the Leonard Lopate Show said that the left just can't manage to be angry, while the right can't seem to generate humor. Maybe I'm missing something. The right has Chris Buckley, P. J. O'Rourke, Jonah Goldberg, David Kahane, Glenn Beck, and so on. Who does the left have? A bunch of guys and gals who fall over laughing whenever someone mentions Bu$hitler.

And the left doesn't do angry? The only thing the left does better than angry is pompous, condescending self-righteousness. (The anger comes when you put it like that.)

Monday, September 27, 2010

Vote Nixon!

Here's some footage of the first 1960 Presidential debate between John F. Kennedy and Richard M. Nixon. Nixon sounds like a guy I would vote for in a heartbeat.

Too often in appraising whether we are moving ahead or not, we think only of what the federal government is doing. Now, that isn't the test of whether America moves. The test of whether America moves is whether the federal government, plus the state government, plus the local government, plus the biggest segment of all - individual enterprise - moves.

We have, for example, a Gross National Product of approximately $500 billion. Roughly $100 billion to $125 billion of that is the result of government activity. $400 billion is the result of what individuals do. The reason the Eisenhower administration has moved, the reason we've had the funds locally to build the schools and the hospitals and the highways, to make the progress that we have, is because this administration has encouraged individual enterprise, and it has resulted in the greatest expansion of the private sector of the economy that has ever been witness in an eight-year period.

And that is growth. That is the growth that we are looking for, it is the growth that this administration has supported and that its policies have stimulated.

The Post I've Been Wanting to Write

I've been trying to figure out the right angle on a post for a few weeks, one that talks about the idea that the real problem with the American economy is that we aren't consuming enough. Until we kick-start consumptions, the idea goes, the economy will remain sluggish. (The idea is poppycock, by the way.)

Anyway, I've been pre-empted by Kevin Williamson, who has explicated it better than I could have.

Saturday, September 25, 2010

You Didn't Ask Me But I'm Going To Tell You Anyway

I have what I guess is a pretty un-nuanced, old-fashioned view of Don't Ask Don't Tell. Basically, the purpose of the military is to bring violence upon our enemies. It's not a tool of social policy. If having gays serve openly in the military enhances its ability to do violence, then I'm all for it. If not having them serve openly works better, then I'm all for that. If DADT is the best policy, then... well, you get the picture.

It's possible to take that "best for the military" thing too far, of course. I wouldn't support a policy of executing every tenth man in a platoon that screws up, even if that could be proved, via scientific study, to enhance military effectiveness. But our policy with regard to gays in the military has never been anything like that draconian. If discovered, they are discharged; that's all.

Being gay might be a personal choice, or it might be inherent. There's a big debate about this, and in some cases it might matter which is right. (Personally I suspect it's a bit of both, in different proportions for different people.) In the case of military policy, I don't see how it matters one bit. If it's a choice, then that's one choice that's denied to you, like wearing shorts and sandals on parade, or wearing a nosering and a mohawk. If it's inherent (which is a broader term than "genetic" - it might be inherent due to upbringing), then so are lots of other things that keep people from serving in the military. If you have flat feet, you cannot serve. Why? Because it detracts from military effectiveness.

Which of these policies actually is best for the military is not a question I am at all qualified to answer. But it should be the only question being asked. Whether it enhances social justice or something is irrelevant.

Thursday, September 23, 2010

A Death Tax Tale

Once upon a time there was a company. This company was founded during the Great Depression, and survived that turmoil and the World War that followed it. In the 1960s it was bought by a pair of entrepreneurs who thought they could make it even better. And they did. Under their ownership it prospered. Eventually one of these owners died and his family's share was bought back by the company. That was costly, but the company survived it. The company survived other hardships as well: legal troubles, financial market struggles, moves, new products.

The company has been run by this family of entrepreneurs for nearly fifty years now. And after all of this history, it has been forced to sell itself. Why? Has the company been poorly run? Is it drowning in debt and has to find a partner to help pay its creditors?

No. The company generates millions of dollars in profits a year. It has no debt.

What is happening is simple: the second of the pair who acquired the company is aging, and so is his wife. At some point - maybe tomorrow, maybe ten years from now - they will be dead, and the estate tax will kick in. And if that happened, the company would basically be out of business, because while it is a cash cow, it doesn't have the funds to buy back enough stock to allow the family to pay those taxes. Furthermore, such buybacks would radically change the capital structure of the company, with the family possibly losing control. And all for no good reason.

Naturally, the company wants to avoid this outcome. So it is being acquired. The family and the minority shareholders get their payoffs now, and the company will be absorbed by its new partner. While the company has been lucky - the partner has pledged to run the company as a stand-alone operation, and not mess with its corporate operations or culture - they will install a new CEO, and inevitably some changes will be coming. Employees are nervous, and rightly so.

This is the sort of unintended, and injurious, consequence that Republicans talk about when they attack the "death tax." To make matters worse, in this case at least, the government won't even collect the tax. The acquisition will trigger some capital-gains taxable events (I assume - it may even manage to avoid those depending on the specifics of the deal), but those will be timed to coincide with current lower capital-gains tax rates. The 55% estate tax that will go into effect in 2011 (barring new legislation to prevent the sunsetting of the 2001 Bush tax cuts) will collect zero revenues from the company. It's hard to find a purer example of the Laffer curve at work.

Friday, September 10, 2010

Stupid Koran Tricks

So there's this dimwit (whose name I won't honor by putting in print) in Florida who wants to burn a Koran tomorrow. Stupid.

But what's nearly as stupid is the press coverage of it. Years ago, networks figured out that when some drunken sports fan jumps onto the field to make an ass of himself, the thing to do is not to broadcast his antics to millions of viewers across the nation. You studiously don't film it, talk about something else for a few minutes while security takes care of it, then get back to the game.

I suppose it's harder to do that here. This Florida pastor isn't doing anything illegal, so the police won't be hogtying him and marching him off to the drunk tank. And he can make as much noise as he wants to on the Internet and wherever else he can. But why help him by giving him free publicity? I'll do my part by not providing a name or link, although that's spitting in the wind considering that his name, church, and probably blood type are already in all media outlets.

It's kind of sad when the sports media is wiser than the rest of the media.

Thursday, September 9, 2010

On Same-Sex Marriage

I've written before that I find arguments both for and against same-sex marriage to be about equally inane. That leaves me, net-net, against codifying the practice into law, because as a conservative I favor a millennia-old tradition over a newfangled idea unless significant evidence can persuade me otherwise.

National Review's recent editorial "The Case For Marriage" is the best argument I've read to date bolstering my default position. Is there a similarly persuasive case in favor of same-sex marriage? If so, I haven't read it - and as I've said, it would have to be even more persuasive to swing me against tradition.

Tuesday, September 7, 2010

Why is Labor Day a "patriotic" holiday?

On Independence Day we celebrate our founding as a nation - if we're going to have a flag-waving holiday, that's the logical choice. On Memorial Day we celebrate our fallen warriors - so that one makes sense, too. We have two days on which we celebrate specific American heroes - Presidents' Day and Martin Luther King Day - but those evince at most mild patriotic displays. Thanksgiving is traditionally American, but centers more around family than country. New Year's Day is a strictly secular, global holiday; finally, Easter and Christmas are religious, global holidays.

Other than minor holidays like Veteran's Day and Columbus Day, which most of us don't get anyway, that leaves only Labor Day. In my experience, Labor Day is third behind only Independence Day and Memorial Day in patriotic displays. In my town, for example, we have a fireworks display. I see kids wearing American flag clothing in the park.

But Labor Day is not especially American, and the part of it that is has not much to do with founding American values. Labor Day commemorates the bloody breaking of a strike in 1894. Its associations are with the International Labor movement and it is essentially the American version of May Day, which is the international (not American) socialist holiday (and also commemorates a massacre during a 19th-century strike). Labor Day was created as a conciliatory gesture toward the growing labor movement.

So I don't quite understand the fireworks and the flags. USA! USA! We're unionized!

Math Corner

John Derbyshire has another good one up in his August Diary. It's another probability question, this time about cards:

I have an ordinary deck of 52 playing cards. I shuffle it thoroughly. What is the probability that not one card is in its original position?

As often happens, the way to approach this is to look at the conjugate question: what is the probability that at least one card is in its original position? Suppose, for example, that one card is in its original position - we'll call this a stationary card, because it didn't move after shuffling. There are C(52,1) ways to pick this one card, and the other 51 cards can be arranged arbitrarily, so there are 51! ways to arrange them. However, we've done some double-counting here, because some of those 51! include arrangements that have a second stationary card.

It's worth going over this point in some detail, because this is an argument we're going to come back to again. To see what's happening here, it's useful to reduce the number of cards. So let's say there are only 4 cards, numbered 1, 2, 3 and 4. There are, of course, 4! = 24 possible arrangements of these cards. Let's look at all the arrangements with the "1" card in its original position:


Also, let's look at all the arrangements with the "2" card in its original position:


Notice something? The lists aren't distinct. Those first two entries are common to both lists. What we've done is double-count arrangements that contain at least two stationary cards.

We can subtract those back out pretty easily: there are C(52,2) ways to pick two cards, and then 50! arrangements of the other 50 cards. So we'll subtract C(52,2)50! arrangements.

But wait! We've removed too much, because both of the previous sets included arrangements that had at least three stationary cards. Going back to the 4-card example, take a look at the arrangement "1,2,3,4". We originally double-counted it, but then we double-removed it. So to count those arrangements we have to add back in arrangements with at least three stationary cards, and that's C(52,3)49!.

It should be no surprise at this point that this pattern continues. Now we've double counted arrangements with four stationary cards, so we subtract C(52,4)48! of those, at which point we need to add back the ones with five - there are C(52,5)47! of them - and so on. We end up with this many arrangements:

C(52,1)51! - C(52,2)50! + C(52,3)49! - C(52,4)48! + ... + C(52,51)1! - C(52,52)0!

There are 52! total arrangements of 52 cards, so to get the probability, we divide the above expression by 52!. This simplifies down to:

1/1! - 1/2! + 1/3! - 1/4! + ... + 1/51! - 1/52!

But this is the probability of having at least one stationary card, and we wanted the probability of having zero stationary cards, which is:

1 - 1/1! + 1/2! - 1/3! + 1/4! + ... - 1/51! + 1/52!

Reasoning the same way you can see that if you had n cards, the probability would be the first n+1 terms of this series. (It's an interesting fact that the above expression is the first n+1 terms of something called the Taylor series for 1/e, where e is the base of natural logarithms that you may dimly remember from high school or college. For more than 8 or so cards, the difference between the actual probability and 1/e is very small: less than 0.01%.)

Let's look at Derbyshire's second (related) problem:

I have a deck of n cards, numbered from 1 to n. I shuffle the deck thoroughly. Then I turn the cards over one by one. If the k-th card I turn over bears the number k, call that a "match." What is the probability that after going through the whole deck I shall have tallied m matches, where m is some number in the range from zero to n?

Based on the work we did before, this isn't hard at all.

Let's write the number of arrangements of n cards that have m matches (what I earlier called "stationary cards") as A(n,m). Then the probability p(n,m) that Derbyshire seeks is just A(n,m)/n!. Furthermore, we can reason about A(n,m) as follows: Suppose we select m cards and call them the matches. There are C(n,m) ways to make this selection. For each selection, there are A(n-m,0) arrangements of the remaining cards that have no matches. Any combination of a selection of m matches along with an arrangement of n-m cards that have no matches is equivalent to an arrangement of n cards with m matches. So A(n,m) = A(n-m,0)C(n,m).

Furthermore, since p(n,m) = A(n,m)/n!, we can write p(n,m) = A(n-m,0)C(n,m)/n! = p(n-m,0)C(n,m)(n-m)!/n! = p(n-m,0)/m!. Since our solution to the first problem gave us p(n,0) for every n, we now know how to calculate p(n,m) for every n and m.