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Tag: politics (page 1 of 23)

It’s not Obamacare, it’s supply and demand

A number of my Republican friends love to bring up the negative effect that Obamacare is having on workers. If you like theoretical arguments, there’s CKE Restaurants CEO Andrew Puzder arguing that Obamacare inevitably brings about a shift of full time workers to part time work. In a poll of 603 smallish business owners, 41% said they had frozen hiring because of Obamacare. For people who prefer to stick with anecdotal evidence, there’s a guy who owns Five Guys restaurants that says burger prices are going up because of Obamacare.

The counterargument relies on basic microeconomics. In a rational market, businesses will hire the number of employees that enables them to maximize their profits. If you are a profit maximizing home builder and you can profitably build and sell 100 homes a year, you’ll hire enough people to build 100 homes, spending as little on labor as you can. If you choose to build only 50 homes because you are afraid of the mandate in Obamacare, some other business will build the remaining 50 homes, and hire the people needed to do so. For an individual businesses, Obamacare will almost certainly have some effect on labor costs. For some, it may raise them, and for others, it may lower them. Economically speaking, though, there’s nothing special about it. Costs may go up due to higher fuel prices, or increased costs of lumber, or go down due to purchasing new equipment that makes home building more efficient. Operating a business is about understanding and managing costs.

As Mr. Puzder argues, one way to reduce costs is to shift full time workers to part time to avoid the requirement to provide employees with health insurance. While Obamacare may present business owners with another incentive to do so, this is hardly a new approach to cutting labor costs. There’s a lot of information in Fast Food Nation (published in 2001) about how fast food restaurants take advantage of a variety of labor regulations to save money, including keeping employees on part time status. What’s important is that the opportunity to switch employees from full time to part time is a luxury afforded to employers by the bad job market.

Obviously workers can quit their jobs any time and pursue better opportunities. The reason companies can cut their employees’ hours is that those opportunities are not available. Likewise, in a robust job market, replacing departing full time workers with part time workers would be much more difficult if the job market were better. Imagine what would happen if Google decided tomorrow to switch all of its engineers to part time positions with no benefits. They’d all have different jobs in no time and Google wouldn’t be able to find anyone to take their place.

Finally there’s the argument that Obamacare, and by that I mean providing health insurance for full time employees, will force companies to raise their prices. This is not how pricing works. Five Guys will charge as much as it can for a burger and fries, minimize its costs, and try to make a profit. Clearly higher costs that result from Obamacare (or anything else) may threaten the profitability of a business, but the idea of the new costs being passed directly on to the customers is just a scare tactic.

The economy has been in a sputtering recovery since it pulled out of the great recession of 2008. The result has been persistently high unemployment numbers and an epidemic of underemployment, along with a large migration of the long-term unemployed to long-term disability. For various reasons, the Federal Reserve, Congress, and even the White House have failed to come up with a coordinated response that has any hope of accelerating the recovery.

Most Republicans don’t even believe it’s possible for the government to address these kinds of economic problems in any effective way, and certainly aren’t open to supporting policies that might prove them wrong. In the end, they find it easier to scapegoat Obamacare rather than taking responsibility for their lack of a jobs policy of any kind.

The reason I bring this up is that being a free-market capitalist should be as much about understanding the free market as it is about yelling at the government to stop interfering with business. Convincing people that Obamacare is killing jobs is a huge obstacle to building a consensus for actually taking on our economic problems head on.

The last campaign book you need to read

Now that I’ve read Richard Ben Cramer’s What It Takes, I’ll never look at elections or election coverage the same way again. More importantly, I’ll never look at media criticism the same way again.

First of all, let me start by saying that it’s one of the best books I’ve ever read, period. It’s brilliantly constructed and incredibly well written. Ezra Klein wrote about the book’s impact when Richard Ben Cramer passed away earlier this year.

The most brilliant thing about the book is that Cramer writes with sympathy for all of the candidates that he covers. I wouldn’t have wanted most of the book’s subjects to be President, but I felt bad for all of the losers and the eventual winner as the book unfolded.

I think, though, that the lasting impact of the book is that it makes it clear that all of the political themes we discuss today are just echoes of the same themes that we’ve been arguing about for decades. For example, here’s a snippet from a 1988 Gary Hart speech:

Agriculture and energy, that’s another. … Infrastructure—now what is that? That’s our roads and harbors, and public works, our sewer systems, transit systems, and bridges—there’s bridges falling down in this country in every state of the union! That’s how to put our people back to work!

That sounds like something any Democratic politician might say today. His explanation of Texas conservative politics decades ago that could be a word for word description of the Tea Party today. None of this stuff is new.

Most importantly, he lays the idiocy and destructiveness of horse race campaign coverage bare. The desire to reconstruct actual events into a narrative that the pack can write about, the eagerness to chase pseudo-scandals to keep things interesting, and the need to discipline candidates who don’t meet the expectations of the media horde — he sees and reports on it all.

If you’re interested in politics at all, I’d skip the contemporary accounts and go back and read What It Takes. It’s all already there.

What we learned last night

The main thing we learned last night from the massive success of the poll aggregators that I wrote about before the election is that the polls do accurately reflect the variables that have traditionally been thought of as beyond polling. The Republicans launched a massive legislative voter suppression effort that probably affected the results. The Obama campaign put together what was probably the greatest get out the vote effort in history. What we learned is that their impact was factored into the polls. Even the naive model used by electoral-vote.com did pretty well (their Rasmussen-free map did as well as Nate Silver). Forecasting the election by aggregating state polls is a winning strategy, at least for the time being.

Update: Here’s a list of the individual polling firms that most accurately predicted last night’s results. Good polling is critical, and this year’s polling was very good (as proven by electoral-vote.com), but the main takeaway is that there’s almost no point in looking at individual poll results when you can aggregate all of them.

More on aircraft carriers

In last night’s debate, Paul Ryan asserted that under the Obama administration, America will have its smallest navy since before World War I. That brought me back to my post about aircraft carriers. Here’s a breakdown of all of the operational aircraft carriers in the world:

As we know, China’s aircraft carrier is unusable.

Are we really worried about the United States’ naval capabilities?

(via Conor Friedersdorf)

Mark Lilla reviews the conservative mental state

The Great Disconnect

In what was probably the best piece of political writing I’ve read this year, Mark Lilla discusses the huge gap between how Obama-hating conservatives and sane people perceive the Obama presidency. This describes an experience many of us have had:

Whenever conservatives talk to me about Barack Obama, I always feel quite certain that they mean something else. But what exactly? The anger, the suspicion, the freestyle fantasizing have no perceptible object in the space-time continuum that centrist Democrats like me inhabit. What are we missing?

He doesn’t get any closer to an explanation than anyone else I’ve read, but he describes the phenomenon fantastically well.

Political risks to the future of the Internet

This week, I had the opportunity to watch Albert Wenger of Union Square Ventures give his talk on the threats to a free and open Internet. These issues have been near and dear to my heart for many years, and I’d encourage you to watch it.

He points out that the current threats to the Internet arise from the fact that the Internet is a network of networks, and those networks are often threats to established hierarchies. Established hierarchies don’t go down without a fight, that’s true whether we’re talking about cable companies, record companies, or government agencies that want to be able to wiretap anyone, anytime. They are willing to spend big bucks to preserve their businesses for as long as they can. That’s not news to anybody who’s been paying attention.

What did occur to me is that the way the Internet wins is by increasing productivity — by enabling us to get more out of existing resources. In a time when economic growth is stagnant, it is very difficult for the forces of the Internet to win in the political arena for this reason.

Albert talked about the fact that municipal governments are being lobbied by hotels to clamp down on Airbnb. The hotels don’t want the competition and government agencies are willing to listen to the hospitality industry. Hotels are big business. They generate jobs, they pay taxes, and a thriving hospitality sector is a key to bringing in tourist and business travel dollars.

Airbnb is great because it makes it very simple for regular people to put their resources to more productive use. If you have a spare room, or a vacation home, or any other place where people can stay, Airbnb makes it easy to turn it into an economic asset. For people who are traveling, they can save money and often stay in more interesting accommodations than a generic motel by the interstate.

If the economy were operating at full capacity, this increased efficiency would be fantastic. Basically, we’d see resources that would be put into opening new hotels put toward other projects instead. Future hotel workers would work in other industries. That’s not how things are now, though. Increasing productivity just adds more slack to the economy, slowing our recovery. Airbnb is just one example of the Internet’s most common pattern of disruption.

The Internet is wonderful because it is a massive productivity enhancer. It also sucks because it’s a massive productivity enhancer. It’s what puts the Internet on the wrong side of most political fights from the beginning.

Why does Chris Dodd work for the MPAA?

Today I noticed that the New York Times had set up one of their room for debate features on the topic What’s the Best Way to Protect Against Online Piracy? The most pro-SOPA piece is written by the Democratic former Senator from Connecticut, Chris Dodd. What’s his current job? Here’s the byline:

Chris Dodd, a former U.S. senator who represented Connecticut from 1981 to 2011, is the C.E.O. and chairman of the Motion Picture Association of America.

You don’t have to think too long to figure out why the MPAA hired Chris Dodd. It’s not because of his experience in the film industry, he’s a lifelong politician. It’s not because of his legislative experience, he was not a member of the relevant committees. He’s got the job because he spent 30 years in the Senate, and the movie industry wants someone with clout to represent their interests on Capitol Hill.

Monied interests, whether they’re companies, trade groups, unions, or issues-based organizations, have many, many ways to influence the political process. Obviously they can attempt to influence the political process directly with money, see Stephen Colbert’s SuperPAC for details. They can also hire lobbyists, who, in addition to wining and dining legislators, also influence the process by offering to take some of the workload off of Congressional staffs. They’ll even write the bills for Congress! And of course they can spend money to try to influence public opinion, through advertising, or organizing “grassroots” opposition or support. They can pay academics to do research that supports their interests. They can pay experts to write opinion pieces in their favor. Or, as in the case of Chris Dodd, they can hire a long-time Senator to run their trade group.

My point is that if you have interests to promote, and you have money you can use to promote those interests, there will always be inroads into the political system available. That’s not an argument against campaign finance reform — the fact that being a politician is more about fundraising than anything else is a big problem that public financing of elections could fix — but it is an argument that in every case where it’s not money versus money, it’s going to be people power versus money, and no reform will change that. The work never ends.

The anti-SOPA protests worked

The big news of the day is that on the day of the blackout protests, 18 Senators announced their opposition to PIPA, the Senate version of the SOPA bill. Most of the newly opposed Senators are Republicans. Sadly, Democrats get a lot of campaign contributions from the entertainment industry, and the entertainment industry desperately wants to be granted even more authority to bully suspected copyright violators.

Killing this terrible bill is great, but there are two broader discussions that really need to take place. The first is about whether attempts to prevent piracy through new laws is worthwhile at all. (I would argue that it is not.) And the second is about how laws like SOPA come about in the first place. For more on that, read about Larry Lessig’s recent work.

The latest on SOPA/PIPA

The good news is that all of the complaining is working — politicians are backing away from SOPA/PIPA.

The bad news is that the politicians still don’t really get it. The President challenged the technology to again come up with new ways to prevent users from copying things. Don’t miss Nat Torkington’s response.

The real state of government regulation

Right wingers like to blame our lack of economic growth on excessive government regulations. While I would agree that there are likely plenty of regulations on the books that could be repealed without harming consumers, the truth is that we have plenty of big problems with industries that are under-regulated and cases where regulations are not enforced. All too often, this occurs when the people who suffer are poor. Here are a couple of examples.

In the first case, the LA Times published a three part series on Buy Here Pay Here car dealerships, which sell cars under a model similar to rent to own furniture stores. This industry is mostly unregulated, and involves loaning money to desperate car buyers at usurious rates. Many customers default on their loans and the cars are repossessed and sold to the next person doc one along.

In the second case, NPR and the Center for Public Integrity produced a multi-part series on how clean air regulations are not preventing industrial plants from discharging massive amounts of air pollution and damaging people’s health, mostly due to lax enforcement. Activists in Tonawanda, New York fought for thirty years to curb pollution from a nearby plant. The plant, in the meantime, systematically deceived regulators and continued its polluting ways. For all the talk of excess regulation, the plant remains open and is still producing pollution, albeit at a lower level.

For all the talk I hear about excessive regulation, what I read a lot of are stores about insufficient regulation. It’s also worth pointing out this Treasury Department blog post that examines what an economy that’s stagnating due to regulatory uncertainty might look like, and argues that the US economy is not showing those symptoms.

On a related topic, I found Tyler Cowen’s theory that regulatory enforcement depends more on the number of regulators rather than the number of regulations to have interesting implications. There’s an argument to be made that to implement an effective regulatory regime, it’s just as important to get rid of useless old regulations as it is to implement new ones.

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