Chat And Chew : Political Discussion

This is an open thread to talk about politics.  Wanna talk polar bears?  Wanna talk Evangelical Manifesto?  Wanna talk about the train wreck known as the Democratic primary?  All are in play here.

Comments

[tgirsch]

matt curtis:

The army is in a lot worse shape than simply being stretched thin. Attrition is at record levels, and the ones who are leaving are the best and brightest, creating a shortage of quality officer material that will take literally a generation to replace. I know it's a "liberal" source, but I suggest you read the article with an open mind. It's pretty eye-opening.

[Rob Ryan]

It looks like my faith in Hillary was justified. Her speech was a dandy, and her peeps responded well to it. Those who thought she would opt for the scorched-earth approach were wrong.

Can't resist a little I Told You So.

[Steve Clarke]

Rob, you were correct, although for a few days there it looked like she was attempting to force Obama into putting her on the ticket or risk her undermining his campaign. I still wonder if Hillary doesn't have designs on 2012 that might color her support for Barack this year. Regardless, I am happy that the interminable primary season is behind us.

[Rob Ryan]

"...I am happy that the interminable primary season is behind us."

So am I. I hope we can have a civil general election with a minimum of fear-mongering and misrepresentations from both sides.

[matt curtis]

"I was in the Army from 1989 to 1992 (and in some sense from 1958 - 1989) and the Army was just coming off of a very bad period."

Oops.... That was supposed to be 1985 (not 1958).

[tgirsch]

Rob:

I'll grant you the "told-you-so." I have to admit, I was getting worried -- she was looking more and more like she was going to fight this all the way to the convention. Next thing for her to do, I think, is to kick her "trusted advisers" to the curb. They ran a disastrous campaign, which took her from "presumptive nominee" in January/February to "almost certainly not nominee" by early March.

All:

I have to say, I'm now being forced to reconsider my defense of Obama on the matter of holding talks with Iran, but not for the reasons you might think: I recently learned that my position here has put me in the extremely uncomfortable position of agreeing with Pat Buchanan. History has shown that any time you agree with Pat Buchanan on anything, you need to take a second look. :)

[matt curtis]

Tom,

I skimmed the article, most of which was anectdotal relating to a single West Point graduate. I knew others like him at school and since. Being a graduate of one of the academies is no assurance of a particular worldview, political leaning, or support of a military policy.

I need to look at the actual numbers because the conclusions of the author of the article you cited differ from recent statements of one of my classmates who is still in the Army. It would not surprise me at all that attrition is occurring at higher rates now with the increased operational tempo - it is an incredible strain on men, women, and their families. It is one that we should appreciate, and we should be thankful those who sacrifice so much.

[matt curtis]

Tom,

I did go ahead and carefully read the full article. Overall, it was well-written and made many excellent points. Some of the underlying data may be questionable in light of the information provided by my classmate, but I don't think that impacts the overall conclusions of the article.

Looking more at the individual experiences, I am very sympathetic to Kapinos and Morin. I too studied counterinsurgency warfare at West Point and it appears that I drew similar conclusions to those stated by Kapinos and Morin: there is a time for overwhelming force ("shock and awe" was an extremely effective tactic during the first stage of the war [my conclusion]), but counterinsurgency requires a far more careful and precise application of force coordinated with civil and political efforts. It requires that soldiers get off their armoured Humvees and Bradley Fighting Vehicles and get close to the people. It means that you've got to get away from the use of indirect fire and air strikes to attack insurgents unless you have successfully segregated them from the general population. It means putting the individual soldier in more exposed positions with greater short-term danger in order to achieve longer-term payoffs and better security.

As a young officer in Saudi Arabia during Desert Shield, I was infuriated by the decision to distribute ammunition to the units only to be told to keep it crated in case we had to turn it all in and go home (it's not very easy to carry it in the vehicles that way and it sends the wrong message to the troops). I was similarly frustrated when our commanding general, Gen. Barry McCaffrey, told us he had learned the lessons of Vietnam, and then told us that if one of our vehicles took fire from a single rifle from a house we were to turn all barrels of our unit on that house and blast away. That had not been one of the lessons I had learned at West Point and didn't think it a particularly wise thing to do. And I look back at the motto of our brigade of the 24th Infantry Division (actually, I think it may have been of the Division itself), "Safety First, Sir!"

In short, I think the article you cited raises important questions that do need to be carefully considered and answered. At the same time, we have to be careful that we do not assume that the next war we are called to fight will be the same as the last one.

[tgirsch]

matt curtis:

This section does not seem "anecdotal" to me:
In the last four years, the exodus of junior officers from the Army has accelerated. In 2003, around 8 percent of junior officers with between four and nine years of experience left for other careers. Last year, the attrition rate leapt to 13 percent. "A five percent change could potentially be a serious problem," said James Hosek, an expert in military retention at the RAND Corporation. Over the long term, this rate of attrition would halve the number of officers who reach their tenth year in uniform and intend to take senior leadership roles.

But the problem isn't one of numbers alone: the Army also appears to be losing its most gifted young officers. In 2005, internal Army memos started to warn of the "disproportionate loss of high-potential, high-performance junior leaders." West Point graduates are leaving at their highest rates since the 1970s (except for a few years in the early 1990s when the Army's goal was to reduce its size). Of the nearly 1,000 cadets from the class of 2002, 58 percent are no longer on active duty.

This means that there is less competition for promotions, and that less-able candidates are rising to the top. For years, Congress required the Army to promote only 70 to 80 percent of eligible officers. Under that law, the rank of major served as a useful funnel by which the Army separated out the bottom quarter of the senior officer corps. On September 14, 2001, President Bush suspended that requirement. Today, more than 98 percent of eligible captains are promoted to major. "If you breathe, you make lieutenant colonel these days," one retired colonel grumbled to me.

The dismay of senior leaders at this situation pierces through even the dry, bureaucratic language of Army memoranda. In an internal document distributed among senior commanders earlier this year, Colonel George Lockwood, the director of officer personnel management for the Army's Human Resources Command, wrote, "The Army is facing significant challenges in officer manning, now and in the immediate future." Lockwood was referring to an anticipated shortfall of about 3,000 captains and majors until at least 2013; he estimated that the Army already has only about half the senior captains that it needs. "Read the last line again, please," Lockwood wrote. "Our inventory of senior captains is only 51 percent of requirement." In response to this deficit, the Army is taking in twenty-two-year-olds as fast as it can. However, these recruits can't be expected to perform the jobs of officers who have six to eight years of experience. "New 2nd Lieutenants," Lockwood observed, "are no substitute for senior captains."
It is one that we should appreciate, and we should be thankful those who sacrifice so much.

On this, at least, we agree.

[matt curtis]

Tom,

More on one of your previous posts.

You offer a false dilemma: that the only three choices with Iran is the status quo, our President sitting down with Iran's leadership without any preconditions, or directly threatening military action. From that false dilemma, you then conclude that Obama was correct in suggesting talks without preconditions because what we've been doing so far hasn't worked and threatening military action is a bad idea. Those three alternatives leave out a whole host of other options, many of which can be exercised simultaneously. Moreover, it is premised on the idea that doing something is better than doing nothing - certainly not always the case - and that threatening military action shouldn't be the option exercised.

more later....

[matt curtis]

"Frankly, I'm tired of people arguing that we should bend over backwards to shape our behavior based on how it might be construed by our enemies."

The best cure for this is to "say what we mean, and mean what we say." Too often, "diplomacy" seems to be "Newspeak" for say whatever you think the other side is likely to believe and will further the short-term agenda so long as it does not include any credible threat of force. Diplomatic efforts should be directed at attempting to achieve national interests and should be part of a cogent, overall strategy that coordinates diplomatic efforts with economic carrots and sticks and the military. Seeing military force as being in opposition to diplomacy is counterproductive, but both the Pentagon and the State Department seem entrenched in that mindset.

We do need to be hugely concerned with how other nations will perceive our policies and intentions. If other nations are wrong in their assessments, then we have little hope of accomplishing our national objectives. Can you imagine what might happen if China underestimated our commitment to the defense of Taiwan and crossed the channel? Or, what if Iran doubts our commitment to Israel and launches a nuclear strike against it?

The perceptions of other nations critically matter to our foreign policy objectives. Does that mean that dissent should be muzzled in order to maintain the favored perception? It certainly shouldn't. But politicians who seek political gain rather than their actual firmly held convictions are dispicable - among others I think that Harry Reid (my former congressman and the one who gave me my appointment to West Point) has regrettably fallen into this several times over the last few years (and it happens on both sides of the aisle, but I do think the Democrats have been far guiltier of this in recent years).

As far as negotiating from a position of strength, Obama has suggested weakening our position by entering into talks without preconditions, withdrawing from Iraq (either precipitously or not really at all depending on what you believe of him), and there has been no commitment from him that I have heard toward strengthening our military. Instead, Obama seems content to destroy our economy and create an egalitarian society. He has neither said nor done anything that should dishearten Al Qaeda, Hamas, or Hezbollah at the prospect of his Presidency - quite the contrary.

[tgirsch]

matt curtis:

I'm beginning to think that we're not quite so far apart as we've been thinking. If one understands "without preconditions" to mean precisely the same thing as "unconditionally," then yes, I'll agree that Obama shouldn't have answered the question as he did -- that "without preconditions" is too broad.

To a large extent, it seems as though we may be talking past each other. You seem to be taking "without preconditions" at its most extremely literal interpretation, whereas I'm taking a more nuanced view. At the same time, I've been assuming (probably wrongly) that the types of "preconditions" you'd require are of the type that everyone knows the other nation would never agree to just for the "honor and privilege" of sitting down to talk with us. I suspect the truth, for both of us, lies somewhere in between.

As to the perceptions of other nations, I agree that they are very important, but as you correctly note, they're not the be-all and end-all. Our disagreement on this particular point seems to boil down to a disagreement about which course of action -- talking with Iran, or repeatedly trumpeting the threat they pose -- grants them more stature and legitimacy.

[T]here has been no commitment from [Obama] that I have heard toward strengthening our military

Then you haven't looked. It's admittedly not terribly detailed, but I fail to see how it can be fairly characterized as a lack of commitment. And I also happen to think it's closer to the right approach. For far too long, presidents of both parties have focused our defense spending on huge R&D contracts and defense entitlements (C-130 plant, anyone?) rather than focusing on our men and women in uniform, before, during, and after service. Yes, cutting-edge technology is hugely important, but a first-class military starts and ends with the people who serve.

Instead, Obama seems content to destroy our economy and create an egalitarian society. He has neither said nor done anything that should dishearten Al Qaeda, Hamas, or Hezbollah at the prospect of his Presidency - quite the contrary.

Demagogue often? :) Seriously, though, you seem to be of the opinion here that saber-rattling against these groups is the only effective way to deal with them (I don't even think it's an effective way, but that's another story). As to the "egalitarian society," I'm not sure I've ever quite heard that used as an insult before. I thought equality of opportunity was supposed to be what made America great. I guess I need to go back to civics class...

Finally, I do want to take a moment to give credit where it's due: I honestly appreciate that you took the time to read and carefully consider the article I posted, and note that I am pleased that although we're far from being in complete agreement, we have much to agree on. I'd argue more in common than not, actually, at least on those issues.

[matt curtis]

Tom,

I used "egalitarian" in the following sense: "2 : a social philosophy advocating the removal of inequalities among people." I'm a strong advocate of freedom of opportunity and equal protection under the law. I'm no fan of ensuring equality of outcome. I oppose raising one person's taxes so that what they take home is closer to what someone else takes home. I oppose redistribution of wealth under the tax system or any other government program. Obama seems to stand for those things.

[tgirsch]

Re: egalitarian, I was using this definition:
a belief in human equality especially with respect to social, political, and economic rights and privileges
I would expect that's a reasonable and generally-accepted definition; especially considering that this was definition 1 over your definition 2. :)

I'm no fan of ensuring equality of outcome.

OK, but I don't know of anyone in the mainstream who proposes anything of the sort. Nobody is arguing that wealth should somehow be outlawed, certainly not Obama. I think that whole "equality of outcome" canard is a straw man, frankly. (And one I just heard George Will use last week.)

Many, myself included, feel that those with higher incomes should shoulder a larger share of the tax burden than those with lower incomes, but that has nothing at all to do with trying to ensure equality of outcome. If the tax code were reverted to its mid-1980's (Reagan-era) state*, Warren Buffett would pay substantially more taxes than he does today, yet would still be immensely wealthy; my next-door-neighbor still would be lower-middle-class. But with that kind of tax code, we might not be running deficits in the hundreds of billions.

You also seem to have a much different view of what "equality of opportunity" actually means in practice. If you have one person who, by accident of birth, can afford to make several mistakes and can survive a medical crisis or two without bankruptcy, and you have another person for whom one medical emergency means financial ruin, through no fault of their own, then that's not equality of opportunity, in my estimation. If one person can get their child a quality education while another cannot, that's not equality of opportunity. Equality of opportunity involves not just the right to do certain things, but the practical ability to do so, and the removal of barriers to doing so.

* - It should be noted that I don't advocate a return to a Reagan-era tax code. I prefer something more like the Clinton-era tax code, with the possible exception of leaving the bottom bracket where it is today, as well as working to close some of today's corporate tax avoidance loopholes.

[matt curtis]

"Many, myself included, feel that those with higher incomes should shoulder a larger share of the tax burden than those with lower incomes, but that has nothing at all to do with trying to ensure equality of outcome."

First of all, the numbers are something in the neighborhood of the wealthiest 3% paying 90+% of the taxes. So, point of fact, those with higher incomes are shouldering a substantially greater share of the tax burden. But secondly and more importantly, why should they? On what basis should we demand more from them? Third, your statement about deficits is a non-starter. Experience has demonstrated that with the Kennedy, Reagan, and Bush tax cuts that tax revenues actually increased rather than decreased because the economy grew, individuals and corporations earned more, and they consequently paid more in taxes - although as a lesser percentage of their income. Our deficits are due to runaway spending, not tax breaks. And don't think that taxes on the wealthy affect only the wealthy - what is taxed from them is no longer available to spend, save, or invest - all of which improves the lot of even those at the lowest income levels.

Just think about how it works. Say Warren Buffett pays less in taxes. What he saves in taxes, he invests in a start-up company which then hires new people. In the current economy, where unemployment is very low, the new company has to offer higher wages (or better benefits) in order to lure workers away from other employers (that, of course, puts pressure on other employers to increase wages). In an economy where unemployment is higher, then the wages likely will not increase, but the new company will hire individuals who were not previously working. In either case, more people are working or they are making better wages, which in turn means that more money is put back into the economy by those new workers or the better paid workers - the rising tide lifts all boats.

Now consider a government spending program. Say the government increases taxes. Immediately, there is less capital in the private market meaning there is less to spend, save, or invest. Businesses that were just barely surviving fail because they receive less income. That puts people out of work and they then no longer have money to spend, save, or invest and other businesses are effected. In response, the government increases the amount of money spent on welfare for those now out of work or earning less because of the overabundance of workers. On the one hand, those welfare payments are undoubtedly spent within the private economy, offsetting to some degree the harm caused by the increased taxes. On the other hand, however, unlike the private economy there is no good or labor purchased with that welfare payment. As a result, you cut in half the benefit you get when it is private money spent in the economy for a good or service. Another aspect of the increase in welfare payments that is harder to quantify is that you encourage dependency and you likely do more long-term harm to the very people you were trying to help. I hazard a guess that since the War on Poverty was declared by Lyndon B. Johnson we spend significantly more on welfare each year and haven't decreased the poverty rate one bit - perhaps I'm wrong, but I doubt it.

Now, Obama has said that he wants to appeal the Bush tax cuts because he thinks they were unfair (sounds like the second definition of "egalitarian"), and he has said that he wants to increase the capital gains tax despite accepting that doing so would actually decrease tax revenues because, he said, that would be fairer (sounds like the second definition of "egalitarian").

Next, let me clarify: I do not think we should work toward "equality of opportunity." That's a meaningless phrase. We all have different skills, talents, abilities, and levels of intelligence. Are you suggesting that we should strive for a society where Joe has an equal opportunity to become a doctor as Jim regardless of their individual talents and intelligence? Frankly, "equality of opportunity" is either just meaningless "feel-good" language or its code language for benefitting one segment of society at the expense of another segment. I invite you to come up with a meaningful and workable definition.

Some common ground: by all means, let's close all loopholes in the tax system - but not just for corporations. Better yet, let's eliminate the income tax altogether and go to a value added tax, or maybe a flat tax.

[tgirsch]

First of all, the numbers are something in the neighborhood of the wealthiest 3% paying 90+% of the taxes.

A statistic that's not terribly meaningful without also knowing what portion of the wealth they control. In any case, I'm not sure I buy those numbers. I researched this not all that long ago, and found that the top almost 3% (2.6%, I think) of incomes (in terms of AGI, not raw income) have about a third of the total income of the country, and pay a little more than half of the total income taxes (51% != 90%). Not exactly flat, but not hugely progressive, either. Then when you factor in regressive taxes like sales taxes, FICA taxes, etc., (which the wealthiest taxpayers do not pay on the majority of their income), the total tax picture flattens out even further. When you factor in all forms of taxation at all levels of government, the overall tax picture is remarkably close to flat.

On what basis should we demand more from them?

On the basis that those who reap the most benefits from living in a stable, civil society ought to be the ones who pay the most to support and maintain it.

Experience has demonstrated that with the Kennedy, Reagan, and Bush tax cuts that tax revenues actually increased rather than decreased

I call BS, especially with respect to the Bush tax cuts. Revenues increased only in absolute dollars; but when you correct against either inflation or GDP (you choose your preference), revenues declined. Sure, more total dollars, but those dollars are worth less, such that the overall revenue picture is lower. In 2000, tax revenue as a percentage of GDP was 29.9%; by 2003, it was down to 25.4% By 2005, it had still not returned to 2000 levels. There's no evidence that the tax cuts had anything at all to do with the recovery, either. Here's a look at the numbers from a pro-tax-cut site, in support of my claims here.

Say Warren Buffett pays less in taxes. What he saves in taxes, he invests in a start-up company which then hires new people.

If only it were that simple. Suppose, instead, he invests the money in foreign markets, and outsources a bunch of jobs for cheap labor, in order to improve his bottom line.

If you want to offer targeted tax breaks specifically aimed at those who create good-paying, good-benefit jobs domestically, then I'm all for it. But if you just want to give blanket tax cuts and simply trust that the bulk of the savings will be reinvested in ways that directly benefit the local economy, then I'm afraid I'm way too cynical to buy that.

the rising tide lifts all boats.

Yachts. A rising tide lifts all yachts. :)

Now consider a government spending program.

Well, it depends on the spending program. I don't think government spending programs are unconditionally good, any more than I think that they are unconditionally bad. However, if the program serves to increase the viable work force, and/or it serves to help increase the number of people with disposable income, then that can indeed be of direct benefit to the economy -- in particular if it does so by doing things that needed to be done anyway (think infrastructure, CCC, etc.).

Now, Obama has said that he wants to appeal the Bush tax cuts because he thinks they were unfair

I assume you mean repeal? As to whether the tax cuts were unfair, I suppose it depends a lot upon your perspective and upon your definition of "fair." I'm not entirely sure that they were unfair, but I do think that they were unwise, and that they helped accelerate the trend of concentrating more and more wealth into fewer and fewer hands. Long-term, I don't think that trend is good for the overall health of the country -- it's the type of thing that has historically led to revolt, in capitalistic and socialistic societies alike.

Next, let me clarify: I do not think we should work toward "equality of opportunity." ... I invite you to come up with a meaningful and workable definition.

I'm not saying everyone should have the same opportunity of being a doctor. What I'm saying is that everyone should have a legitimate shot at a middle-class lifestyle, no matter what their background is, and no matter what their chosen career path is (within reason). I'm not saying that everyone should be guaranteed success, nor am I saying that we should force success on people. I'm saying that we should remove barriers to their success.

What does that mean? It means making sure everyone, regardless of background, has access to quality education. It means ensuring that a medical emergency doesn't leave someone in ruin. It means ensuring that anyone willing and able to work a full-time job should make enough to live on. It means that people shouldn't have to choose between taking their child to the doctor or paying the rent.

It doesn't mean guaranteeing their success, or their wealth, or anything of the sort. So it's nothing at all like equality of outcome.

Whether you realize it or not, the system you advocate means that quality health care, quality education, and a reasonable shot at some modicum of success at life all inevitably become privileges of wealth rather than basic rights of citizenship (a fact which Will is at least honest enough to concede). The big problem with this is, it's cyclic, and it only amplifies from one generation to the next.

by all means, let's close all loopholes in the tax system - but not just for corporations.

So far, so good.

Better yet, let's eliminate the income tax altogether and go to a value added tax, or maybe a flat tax.

The VAT is out of the question, as far as I'm concerned, because it invariably winds up being regressive. But in either case, every proposal I've seen ends up with those with lower incomes paying a lot more, and higher incomes paying a lot less, as compared to what they pay today.

I've given some thought to a quasi-flat tax, though, and I think it's possible to work something out. What I've been thinking about is a system where everyone pays a flat 1% of every penny they make -- no exemptions, no deductions, so that everyone has skin in the game. On top of that, everyone is taxed something like an additional 30% on every penny they make over 110% of the poverty level. In this system, absolutely everyone pays something, but you still have some degree of progressiveness, and the regressive FICA taxes are eliminated.

As an example of this, a family of four with the median household income (around $50K) would pay $8,600 in federal taxes, an effective rate of 17.2% Under the current system, that family pays $6,897.50, including FICA taxes, and $10,722.50, if you include the employer portion of FICA. An effective tax rate of between 13.8% and 21.4%, depending upon how you reckon it.

I'm still tweaking the numbers to discern what's fair, and what actually works out to being revenue-neutral, but something along those lines I could go for. Of course, if you do all that, then things like 401(k) deductions go away, as do things like capital gains taxes, etc.

[matt curtis]

"A statistic that's not terribly meaningful without also knowing what portion of the wealth they control."

Why does that matter? You agree that there is not a finite amount of capital? In other words, one person's wealth usually has no bearing on another person's wealth?

As far as the 3% figure, I should do some more checking on that. I've heard it stated a number of times, but I can't recall ever seeing a primary source for that information.

Next, however, I have to challenge your response to tax rate cuts increasing revenue. You asserted that my statement was accurate only if you considered the revenue increases in terms of real dollars rather than accounting for inflation, and if you did not consider the revenue as a percentage of GDP. Since the income tax rate is based on real dollars rather being inflation adjusted (in other words the tax rates do not automatically adjust to account for a weaker or stronger dollar), it would make no sense to consider tax revenue in anything other than real dollars.

Similarly, tax rates are not tied to GDP. Therefore, to say that tax revenues actually decreased with the Bush tax cuts because the revenues as a percentage of GDP decreased is, for lack of a better word, silly. If tax rates were increased and GDP decreased, then would you say revenues had increased because they were a greater percentage of GDP than the previous year even if in real dollars the revenues had gone down?

In fact, with lower tax rates and a stronger economy, you would expect GDP to rise and tax revenues to decrease as a percentage of GDP. Not only is this immaterial to whether actual revenue has increased or decreased, but I really fail to see how getting more tax revenue while burdening the economy less is a bad thing!

Next, why should everyone essentially be guaranteed a middle class lifestyle. Some people choose to work less and are happy with fewer material possessions - there's nothing wrong with that. Others are overachievers and are willing to devote far more time and respources to obtaining material wealth or other success. There's simply no program that can account for these differing desires, nor should there be.

Additionally, you did not address at all the effect of welfare on discouraging self-reliance.

[matt curtis]

"If only it were that simple. Suppose, instead, he invests the money in foreign markets, and outsources a bunch of jobs for cheap labor, in order to improve his bottom line."

It's certainly true that such a scenario would result in less of a benefit to the national economy. However, your argument here completely misses the point because that can and does happen whether there is a tax cut or not. Some businesses will choose to invest elsewhere whether there is a tax cut or not. My argument is that by cutting taxes there is more money to invest, period. Some businesses will invest that outside the country, but others will invest it here. In either case, there is more capital infused into the market than there was before the tax cut. At the same time, however, we know from experience that low taxes is one factor that businesses consider when deciding where to locate. So, reductions in capital gains and corporate taxes can actually encourage fewer businesses to outsource to another nations.

"On the basis that those who reap the most benefits from living in a stable, civil society ought to be the ones who pay the most to support and maintain it."

First of all, if we truly have equal protection under the law, then no one should reap greater benefits than another. Secondly, however, your assertion here (assuming that welfare actually helps those to whom it is directed) means that we should have a very regressive tax since those who are the least affluent receive the most benefit. (Ignoring, for the sake of argument various earmarks which often give benefits to corporations or others, which, as we've already agreed, should be eliminated.)

"Whether you realize it or not, the system you advocate means that quality health care, quality education, and a reasonable shot at some modicum of success at life all inevitably become privileges of wealth rather than basic rights of citizenship (a fact which Will is at least honest enough to concede)."

This statement really is empty and meaningless, but I'll argee with one thing: health care, education, and "a reasonable shot at some modicum of success at life" are not rights. If you are to assert these as rights, then you need to explain how you define a "right".

The reason the statement is meaningless is because there is no way to really define any of what you are talking about. What does it mean to have a right to "quality health care"? Does that mean that anyone needing heart surgery is guaranteed access to the best, most skilled, and most experienced surgeon? "Quality education": everyone gets to go to Harvard, Stanford, or Yale? And how do we measure success in order to ensure that everyone has a reasonable shot at it? A chicken in every pot? 2 cars in the driveway (as long as they're hybrids)? A good steak one night a week?

How do you define "right"?

[tgirsch]

matt curtis:
Why does [percentage of wealth] matter?

How can it not? That the top 3% pay 50% of the taxes seems unfair at first blush, but if they had 50% of the income, how would that differ in practice from the sort of flat tax that you'd advocate for? Hypothetically, if they had 70% of the income and paid 50% of the taxes, this would seem completely unfair. Similarly, if they had 20% of the income and paid 50% of the taxes. By itself, saying that "the top 3% pay 50% of the taxes" tells us nothing useful with respect to fairness or unfairness.

Since the income tax rate is based on real dollars rather being inflation adjusted ... it would make no sense to consider tax revenue in anything other than real dollars.

So if more real dollars still results in less relative ability to pay for stuff, that's not an important consideration as far as you're concerned? Whether or not the increase in tax revenues, in absolute dollars, is able to keep up with inflation, absolutely is relevant in discussing the impacts of a tax cut. If your yearly pay raise lags behind inflation, you can say you're making more money in a very narrow, legalistic sense, but you are in fact worse off than you were before.

Clearly, you object to correcting against GDP. I expected that, and that's why I said you could correct against inflation if you wanted to. But you don't want to correct at all.

I really fail to see how getting more tax revenue while burdening the economy less is a bad thing!

I'm frankly unsure why you see "more total dollars, but worth less overall" as any sort of victory. If your "more tax revenue" is actually less capable of paying the nation's expenses than before, how is this a step forward?

Of course, all of this is a bit of a red herring to begin with, because it assumes that the tax cuts are what caused the increase in the economy, and that tax revenues would be lower if the tax cuts had not gone into effect. Neither fact is in evidence. If tax cuts spur economic growth, and tax hikes hinder it, as you seem to claim, then you should easily be able to look at this graph and tell where the tax cuts and tax hikes took place. Or perhaps you prefer per capita statistics. Either way, it looks to me like tax policy really doesn't have a very profound impact on the economy as a whole. And if that's the case, then our tax revenues would be even higher if we hadn't cut taxes.

Next, why should everyone essentially be guaranteed a middle class lifestyle.

I'll give you a pass on this, and assume you simply misunderstood what I said rather than disingenuously set up a straw man. I never said that anyone should "essentially guaranteed" a middle class lifestyle. I said that everyone should be guaranteed a legitimate shot at a middle class lifestyle. That's a vastly different thing. They'd still have to work at it, and the possibility of failure would still exist. I'm just saying that the deck shouldn't be stacked as strongly against them as it is today. If you're born to a single mother in the inner city, your chances at anything like success are virtually nil without outside assistance. And what kills me about libertarians is that they don't see this as a problem. The "market decided" that these people should have no realistic hope, and it's okay to punish children for the shortcomings of their parents -- they wouldn't put it in those terms, of course, but that's the bottom line. If you want a decent shot at success in life, choose your parents wisely.

Of course, if you really believed all of your quasi-libertarian supply-side non-zero-sum game rhetoric, then you wouldn't object, because elevating the lower class en masse would not bring the rest of us down. You're just "making the pie bigger," right? :)

you did not address at all the effect of welfare on discouraging self-reliance.

Perhaps that's because I didn't advocate for traditional welfare. Unless you consider things like education and health care to be "welfare," in which case we have a serious disagreement in semantics.

However, your argument here completely misses the point because that can and does happen whether there is a tax cut or not.

No, it doesn't miss the point, if the point of the tax cut is supposed to be to spur the local economy. If you're doing the tax cut for the tax cut's own sake, that's a different question; but these tax cuts are always sold in terms of economic impact, and thus it's completely fair to judge them as such.

In either case, there is more capital infused into the market than there was before the tax cut.

That's only true if the tax cut moves you from one side of the Laffer curve to the other. It's not an unconditional truth, as you seem to assume it is. Take, for example, the recent "tax prebate" checks. The overwhelming majority of people -- something like 80%, as I recall -- don't spend the money (which would spur the economy); instead, they either save it or pay bills with it. Neither one has much economic impact, even in the aggregate.

Secondly, however, your assertion here ... means that we should have a very regressive tax since those who are the least affluent receive the most benefit.

Not necessarily. Remember that I'm not talking about "welfare" in the traditional sense here. Employers benefit from a healthy, educated pool of workers. Everyone benefits from a society with less crime and poverty, not just the used-to-be poor. About the only way your statement holds true is if you use a very narrow definition of the word "benefit," e.g., receiving money directly from the government.

The one big benefit that fits your description is social security, but this is overwhelmingly funded by those who receive the benefit anyway. Indeed, most of the recent tax cuts have been paid for by borrowing against the social security trust fund, meaning that in a very real sense, the lower- and middle-classes have been financing those upper-end tax cuts.

[H]ealth care, education, and "a reasonable shot at some modicum of success at life" are not rights. If you are to assert these as rights, then you need to explain how you define a "right".

Life, liberty, and the pursuit of happiness? But seriously, if your objection is to the word "right," then I'll gladly withdraw it. Please substitute "things everyone ought to have access to."

Does that mean that anyone needing heart surgery is guaranteed access to the best, most skilled, and most experienced surgeon?

It means that the kid with a rich daddy has no more inherent right to such surgery than does the kid with a poor daddy. It means that when you cut away all the high-minded political rhetoric, any system in which you can only have life-saving surgery if you can afford a high-five-figure hospital bill is a system that sucks. If your system (whatever it may be) doesn't account for this, or relies on private altruism alone to "fix" it, I'd submit that this is evidence that it's a bad one. Or, at a very minimum, one with absolutely no regard for human well being.

And how do we measure success in order to ensure that everyone has a reasonable shot at it?

As I said above, you ensure everyone has a reasonable shot at it by removing barriers to it. Success is virtually impossible without a good education, so ensure that everyone gets a good education (instead of just limiting it to those who had the foresight not to be born to poor and/or poorly educated parents). You ensure that a major illness or injury won't wipe somebody out and destroy their life. You ensure that there's public transit, so that being able to afford to buy, insure, maintain, and fuel a car isn't a prerequisite to getting a job. Things like that.

What the individual does from there is entirely up to them. If they're lazy or commit crimes or don't try, then they get what they deserve. But there are a lot of people who aren't lazy, aren't committing crimes, and are trying, and still aren't getting by; as long as it's true that the deck is stacked strongly against those people, through no fault of their own, I don't think we just get to look the other way, shrug, and say "Oh, well, that's the price of freedom." It's certainly as un-Christian an attitude as I can imagine.

I return once again to the whole "rising tide" analogy you made. There's no rule that says the tide has to rise from the top down. Why shouldn't elevating the status of the least among us also raise the tide, and thus, all boats?

And let me reiterate yet again that I'm not talking about monetary hand outs, here. I'm talking about actively working to help turn society's non-productive members into productive ones. By all means, they themselves have to work for it, and they have to want it, but if success is virtually impossible for most of them, whose interests does that really serve?

[matt curtis]

"So if more real dollars still results in less relative ability to pay for stuff, that's not an important consideration as far as you're concerned? Whether or not the increase in tax revenues, in absolute dollars, is able to keep up with inflation, absolutely is relevant in discussing the impacts of a tax cut."

It's not unimportant, but it's completely irrelevant to the discussion we were having. If the tax rate wasn't cut, the tax revenues would still be measured in real dollars rather than inflation adjusted dollars. In other words, without the tax cut, we'd be in even worse shape because revenue would be less, even in inflation adjusted dollars, than it would have been had we cut taxes.

"Clearly, you object to correcting against GDP. I expected that, and that's why I said you could correct against inflation if you wanted to. But you don't want to correct at all."

It's not a matter of not wanting to. It simply makes no sense to do so. Your insistence on comparing it to inflation adjusted dollars or percentage of GDP doesn't follow logically. Say GDP in year 1 is $1 Million and tax revenues that year are 10% ($100,000). Tax cuts are instituted and in Year 2 the GDP rises to $10 Million but tax revenues also rise to $200,000. In real dollars, we've seen tax revenues double, but now tax revenues are only 2% of GDP. The only way comparing tax revenues as a percentage of GDP would make any sense at all is if you assume that GDP would have grown at a substantially similar rate even if you did not reduce tax rates - and that would be a tough sell to economists and even the Democrats in Congress.

With regard to inflation adjusted dollars, consider the following: In Year 1, tax revenues in inflation adjusted dollars total $100,000. In Year 2, due to inflation, the dollar is worth 90% of its value in Year 1. Assuming no tax cut and moderate growth of the economy, the tax revenues in Year 2 are $150,000 in real dollars, or $135,000 in inflation adjusted dollars. On the other hand, assume a tax cut that stimulates the economy and results in more money spent and increased tax revenues of $175,000. Adjusted for the same rate of inflation, the Year 2 tax revenues of $175,000 equal $157,500 Year 1 dollars - still more revenue in inflation adjusted dollars than would have been received without the tax cut.

"The overwhelming majority of people -- something like 80%, as I recall -- don't spend the money (which would spur the economy); instead, they either save it or pay bills with it. Neither one has much economic impact, even in the aggregate."

Whether they spend it, pay bills, or save it, there is an economic impact - it just takes different forms. If they save it, then it provides more capital to banks to begin to lend more freely. If they pay bills, then they cut debt and are able to spend more on other things (or save more). If they spend it, then it goes more directly into the economy. All of the scenarious have positive results for the economy, but they are admittedly different.

As far as the Laffer curve goes, there is certainly a point where reducing tax rates result in less tax revenue even while stimulating the economy. Of course, we don't really know what the Laffer curve looks like except at its two ends: do the revenues for a 5% tax rate correspond to a 95% tax rate or a 25% tax rate?

"The one big benefit that fits your description is social security, but this is overwhelmingly funded by those who receive the benefit anyway."

Yeah. What are the current stats? The Baby Boomers are just beginning to retire and it already takes something like 10 current workers to support 1 retired person through Social Security? These types of schemes are outlawed in most, if not all states if Mr. Ponzi tries to set one up. (See Ponzi Scheme)

Next, I grant you that everyone "ought to have access to" life, liberty, and the pursuit of happiness. How do you define and justify "ought to have access to" in order to say that everyone "ought to have access to" quality health care? Tell me what you think a "right" is.

"It means that when you cut away all the high-minded political rhetoric, any system in which you can only have life-saving surgery if you can afford a high-five-figure hospital bill is a system that sucks."

Agreed. It's probably the worst system there is ... except for all others. Seriously, I think we could improve our health care system and reduce costs not by further removing the consumer of the medical care from who pays for that care (i.e. moving from HMOs to gov't single payer), but instead by the consumer being more directly responsible for paying for their own care. The advantage to the latter is that you encourage the individual consumer to value both price and quality. Will it be hard for some? Will there be heart-wrenching stories? Yes, but if we accept that there is no perfect system where we could avoid all such stories, then we have to look for the best system and single payer isn't it.

How do you propose to pay for everything you've suggested? By taking and spending what it would take to do what you propose, you would really be more likely to hurt those you're trying to help. Which goes back to my guess: since LBJ launched the war on poverty (or was that Nixon?), do we spend more now in inflation adjusted dollars or as a percentage of GDP on social programs designed to do exactly what you are proposing more of than we did when LBJ launched the effort? What impact have we had in reducing poverty?

"I don't think we just get to look the other way, shrug, and say "Oh, well, that's the price of freedom." It's certainly as un-Christian an attitude as I can imagine."

As a Christian, I don't think I get to shrug and look the other way, but I also don't think that I get to forcibly take money from your pocket to put it into someone else's pocket.

Signing off; you've got the last word.

[tgirsch]

In other words, without the tax cut, we'd be in even worse shape because revenue would be less, even in inflation adjusted dollars, than it would have been had we cut taxes.

I'm sorry, but that fact simply is NOT in evidence. We simply do not know what the economy would have done if the tax cuts had not been passed, or if they had been passed in a vastly different distribution. There's no control group. As far as I can tell, you're making a "just so" statement.

Your insistence on comparing it to inflation adjusted dollars or percentage of GDP doesn't follow logically.

And your insistence that any and all economic growth and increases in tax revenue is because of the tax cuts -- on no evidence other than your say-so -- does follow logically? I don't get it.

But in any case, if correcting against inflation or GDP doesn't make any sense, then why is it that virtually every serious economist does so? In fact, the only people I've ever seen use current dollars to measure such things are those who are actively advocating for the tax cuts, not people doing a dispassionate analysis. And I get it: you don't want to correct against GDP, that's fine. But then you've got to correct against inflation. Looking at just absolute dollars tells you nothing, because you don't know what those dollars can do.

I'll say it again: it's meaningless to say that more tax dollars are coming in if those dollars are less able to pay the nation's expenses than before, and that's precisely the scenario we have here.

The only way comparing tax revenues as a percentage of GDP would make any sense at all is if you assume that GDP would have grown at a substantially similar rate even if you did not reduce tax rates - and that would be a tough sell to economists and even the Democrats in Congress.

Why would that be a tough sell? After Bush's tax cuts, the economy grew, but it had just taken a big hit (9/11), and was likely to have bounced back anyway. After Clinton increased taxes, the economy underwent one of the best periods of sustained growth the nation has seen. So why is it somehow gospel that more taxes = less growth, and vice versa? The history of the US economy simply doesn't support that claim.

All of the scenarious have positive results for the economy, but they are admittedly different.

We have a consumer-driven economy, and when people aren't consuming, the economy doesn't do so well. Things like personal savings and personal debt are absolutely important, but they're long-term concerns. So when people put their money toward those two things, the economic impact in the here-and-now is virtually nil. This is why the latest round of prebate checks was so widely reviled by analysts from all parts of the political spectrum -- it worsens the deficit problem, while doing virtually nothing to measurably improve the economy.

These types of schemes are outlawed in most, if not all states if Mr. Ponzi tries to set one up.

Social Security as Ponzi Scheme? Really? *Rolls Eyes* Of all the tired libertarian talking points you've thrown out, that one's got to be the biggest whopper.

How do you define and justify "ought to have access to" in order to say that everyone "ought to have access to" quality health care?

Do you not agree that a healthy populace functions better than one in which illness and injury are rampant? Do you think that the only people in society who benefit from it having healthy members are the ones who are actively receiving care? Whether or not one considers it a "right," it's still a good idea. Everyone benefits from the existence of a well-maintained network of roads, even those people who don't own cars and never use them directly. Everyone benefits from having a reasonably well-educated and competent populace, even those who don't have any children to educate. Health care, in my estimation, is no different: it's a near-universal need, and its benefits extend well beyond its direct recipients.

I think we could improve our health care system and reduce costs ... by the consumer being more directly responsible for paying for their own care.

I'm just not confident that it could ever work. At a certain level, health care is simply inherently expensive. Even if you eliminated the exorbitant markups that currently exist (in no small part because of the way our insurance markets operate), someone with a minimum wage job simply isn't going to be able to afford anything other than the most basic sort of care. Without some sort of assistance, a member of the hotel housekeeping staff (for example) just isn't going to be able to afford a trip to the emergency room.

Yes, but if we accept that there is no perfect system where we could avoid all such stories, then we have to look for the best system and single payer isn't it.

I'm not convinced of that, but I'm also not married to the idea of single-payer. I'm open to suggestions. I've said on record before that I don't favor a totally government-run system like Canada's. I'd be more inclined toward a hybrid system, where health care is available for free or for a modest co-pay on a first-come, first-served basis to anyone who needs it, but in which those with the means could bypass the system and go to a private practice, paying out of pocket, if they choose to do so. Not unlike education today: public education is available, but you have every right not to participate, and can choose instead to pay extra for private options.

How do you propose to pay for everything you've suggested?

I've long argued that at least in terms of health care, by eliminating corporate protectionism and by aggressively pursuing fraud, we could offer universal coverage for what we're paying for Medicare today. (Fun Fact of the Day: The United States pays more per capita in tax dollars to fund Medicare and Medicaid than Canada does, and Canada covers everyone, while we only cover seniors and the very poor.)

Which goes back to my guess: since LBJ launched the war on poverty (or was that Nixon?), do we spend more now in inflation adjusted dollars or as a percentage of GDP on social programs designed to do exactly what you are proposing more of than we did when LBJ launched the effort? What impact have we had in reducing poverty?

LBJ's war on poverty was actually remarkably successful. As publius points out:In 1960, 31% of Americans — 31 — lived at 125% or below. The actual number of people was 55 million. After the mid-60s, it starts dropping sharply and is 17.6% (35 million people) by 1970, and hovers steadily there until 1980. What, I wonder, happened in the mid-60s that caused poverty to be cut so sharply. Hmm. Repeal of Sarbanes-Oxley? No, that's probably not it. I’m sure it will come to me eventually.
The Great Society programs cut poverty nearly by half, but were not followed up on, and in many cases were repealed.

I don't think I get to shrug and look the other way, but I also don't think that I get to forcibly take money from your pocket to put it into someone else's pocket.

Well, I suppose that's going to depend on how one defines "forcibly." I'm forced to pay for a $90 billion a year war that I have never supported, but that's part of living in a Democracy -- it's not just about what I want. If we as a society collectively vote to do something, then we can abide that decision, work to change that decision, or leave. I don't have a fundamental, guaranteed right to not pay taxes, even towards causes I don't personally support.

[tgirsch]

And, of course, in all of my ranting, I forgot to mention the easiest thing that we could do to guarantee the "legitimate shot at success" that I'm talking about, and it wouldn't cost a penny of taxpayer dollars: Pass a living wage law. Figure out a minimum wage such that anyone who works a full-time job, no matter what that job is, earns enough to afford food, shelter, clothing, and health insurance. The "freeloaders" are still excluded, and you "raise the tide" from the bottom, creating more people with disposable income, and thus not only buttressing the economy, but also significantly growing the tax base.

Two or three decades ago, the concern would be that this will only speed offshoring of jobs. But by now, that ship has already sailed, and most of the jobs that can be outsourced already have been. And many of the ones that haven't yet are already well in excess of the living wage anyway.

What should the minimum wage be, then? In the late 1960's, when the poverty rate was at its lowest (and, not coincidentally, the minimum wage had the most buying power it had in modern history), the federal minimum wage was $1.60. Translating that into 2008 buying power (using the BLS calculator), we get $9.96 per hour. So that's probably a good starting point for discussion.

[matt curtis]

Tom,

First correction: recheck your stats on the poverty rate. It had already dropped significantly from 1960 by the time Johnson's War on Poverty was declared in 1964. It did continue to go down for some time after 1964, but then evened out and has remained essentially static since. It would be interesting to see whether the definition of poverty for purposes of the census statistics has changed. In a cursory review of the census information, I could not find the actual definition but I likely just missed it.

Next correction: increasing the minimum wage will do nothing to reduce poverty. In many areas of the economy (almost certainly mainly within those industries that employ few minimum wage employees) the profit margins would allow for slight increases in the minimum wage. In those sectors most reliant on minimum wage workers, profit margins likely won't allow minimim wage increases without concurrent increases in prices, reduction of other wages, and/or elimination of some workers. Of course, any of these three reactions is bad for lower income workers as they're going to pay more for the things they buy and so offset their increase in pay, if they were already earning more than the minimum wage their wages may actually decrease, or, worst of all, they may end up out of work because their employer can no longer afford to pay them.

If the minimum wage has no impact on the economy, then why isn't there anybody advocating that it be raised to $15/hr? You might get away with small increases such that the impact is sufficiently small that it doesn't easily show up in statistics, but it is simply logical that there will be some negative impact.

Moreover, likely the vast majority of minimum wage workers are high school students, part-time workers, or the elderly who have retired and are only supplementing other income. Let's not put these people out of work through some misguided attempt to make their lives better.

By the way, were you able to find any information on what we spent on social programs as a percentage of GDP in 1965 compared to the present?

[tgirsch]

matt:

I suspect that a lot of the drop in poverty during the 1960s had to do with the civil rights movement of the 1950's and 1960's, in addition to the Great Society programs. So that certainly factors in, as well, and the Great Society certainly can't take all the credit. However, the fact remains that the poverty rate in the United States was the lowest it has ever been at a time when the Great Society was in full swing. I don't think that's a coincidence. Further, when poverty in the US was at its lowest, the minimum wage had more buying power than it has ever had in the history of the minimum wage. I don't think that's a coincidence, either.

Finally on that note, the pre-1964 decline (from 31.1% poverty to 26.3%, or a 15.4% reduction) is dwarfed by the reduction from there to 1969 (from 26.3% to 17.4%, a 33.8% reduction). So I don't think it's unfair to give a lot of the credit to the Great Society programs, especially when you consider that the bulk of the drop occurred from 1964 to 1967 (from 26.3% to 20%, a 24% reduction in poverty in just 3 years). Source.

As for the dire impacts of raising the minimum wage, those are generally grossly exaggerated. In theory, we'd expect to see an uptick in unemployment, and in fact in practice we do, however that uptick turns out to be barely outside the range of statistical noise. And frankly, even if I accepted your false dilemma (I don't) and said that I could either have some teenager or senior trying to make a few extra bucks part-time out of work, or put somebody who actually is trying to support a family full-time out of work, I'd choose the former every time, and I'm surprised you wouldn't.

In any case, the Statistics disagree with the idea that minimum wage increases cause more unemployment. From 1989 to 1997, the minimum wage was increased in installments from $3.35/hr to $5.15/hr, a 53.7% increase; at the end of all that, unemployment was lower than it was beforehand, and two years after that last increase, it was at the lowest it had been since the late-1960's -- you guessed it, when the Great Society programs were in full swing. Again, I don't think this is a coincidence.

And, of course, because the increase in minimum wage would increase the tax base, we could then afford to pay for more programs to help the teenager and/or the senior.

By the way, were you able to find any information on what we spent on social programs as a percentage of GDP in 1965 compared to the present?

I wasn't able to find any comparative figures (details on the cost of the Great Society programs are sketchy -- best estimate I could find was something like $2 billion in 1964), but it's really a side point, because it's not just a question of how much you spend, but how you spend it (you'll be the first to point out that government is good at wasting money -- that doesn't mean that all government spending is wasteful, however).

The Great Society programs largely focused on education, job training, and job placement. In the 1970's, we made the mistake of moving toward a more hand-out/welfare based system, which isn't the right way to do things, in my opinion.

I've never advocated for expanding welfare. I've consistently advocated for removing the barriers that prevent people from going to work. That may mean helping with day care, providing job training and education, providing health care, etc. Many of these things would be of great economic benefit in the long run. (Think, for example, how much more competitive a large employer like GM could be if they were free of their current health care obligations, and instead were paying the same taxes to support health care as any other US employer, Union or otherwise.)

[matt curtis]

Tom,

Although not necessarily significant to our discussion, we should point out that the figures cited relate to the number of people below 125% of the poverty level. In other words, if the poverty threshold for a particular year for a family of 4 is $25,000, then the referenced table lists the number of four person families earning less than 125% of $25,000 ($31,250). So, the tables don't give us the number of people living under the poverty level unless we subtract from the 125% column the 100 to 125% column. That shows a similar decrease.

What is important here (and I have not yet found anything that indicates how the threshholds were formulated and tested) is that the threshholds were bureaucratic inventions. Accordingly, depending on how the threshhold is set impacts how many people are deemed to be in poverty. Next, we don't know what accounts for the decrease in the number of people living below the poverty level between 1959 and 1964. There's a clear trend in the statistics, but is that due to changes in the threshholds, changes in the economy, or something else? If we don't know what was causing that decrease during that first time period, then we're not in a position to conclude whether the trend is likely to continue at the same pace, slow, speed up, or reverse. Consequently, drawing any conclusions about the cause of the reported decreases in poverty is useless. Another factor that has to be considered is how the information was obtained. How was income determined? Were extrapolations made from limited sets of data? Were government benfits received counted as income? How do you accord income value to a non-cash gov't benefit?

More obviously, though, you have got to address what was actually done: what were the Great Society programs? When did any particular program begin, end, or change in some significant way? How much did it cost as a percentage of GDP? How much was spent may be one of several factors used to determine the effectiveness of a particular program or programs, but it is certainly not a "side note".

As far as looking at some welfare programs that are large parts of our budget, how much has spending increased as a percentage of GDP on Medicare and Medicaid since those programs were initiated?

With respect to the minimum wage. First, simple logic tells us that if you increase the cost of doing business for a company, then something has to happen: the business has to cut costs somewhere or increase its prices. Someone is going to be paid less or let go, companies are going to look for cheaper labor markets or cheaper materials, corners are going to be cut, or prices are going to be raised. And you likely haven't increased the tax base - minimum wage earners are unlikely to pay any tax and many will receive the Earned Income Tax Credit and someone else will be earning less.

But, let's look at the statistics you cited. Based on the table, it's true that in 1989, the unemployment rate was higher (5.3%) than it was in 1997 (4.9%). Of course, in between those years during the periodic increases in the minimum wage, the unemployment rates were 5.6 in 1990, 6.8 in 1991, 7.5 in 1992, 6.9 in 1993, 6.1 in 1994, 5.6 in 1995, and 5.4 in 1996. Now, it's hard to say what caused the initial increases in the unemployment rate from 5.6% in 1989 to 7.5% in 1992, or the decrease in unemployment in the three years following the last adjustment (down to 4.0 by 2000) but to rely on these statistics to argue that increasing the minimum wage does not have a negative economic impact, often on the very people it's intended to help, is unreasonable.

Moreover, after an unemployment high of 6% in 2003, the rate was back down to 4.6% in 2006 (the first increase in the minimum wage from $5.15/hr in 1997 did not occur until July 2007 when it went up to $5.85/hr). If we're relying simply on these statistics, we might conclude that the increase in the unemployment rate this year was due to the incresaes in the minimum wage last year. I'd like to cite that statistic because it fits my conclusions, but I don't think I have any more grounds to do that than you do to cite the other numbers in support of your position.

Finally, taking over GM's pension and health care programs may make it more competitive, but it has a negative overall impact on the economy. Other, more successful businesses (and GM's own employees) would simply see more of their profits and wages go to taxes and a ballooning health care system, reducing everyone's take home pay. I like the tide that lifts all boats rather than the one that grounds them all.

[tgirsch]

matt:
What is important here ... is that the [poverty] threshholds were bureaucratic inventions.

Not really. It doesn't matter who invented the threshold. What matters is twofold: whether or not the threshold measures anything useful, and whether it's consistently applied year over year. If you keep changing the metrics on the fly for your own purposes (e.g., if you change the way in which the "poverty level" is calculated), that is indeed useless. But if the metrics are consistent, then they can give us useful information about changes over time.

Next, we don't know what accounts for the decrease in the number of people living below the poverty level between 1959 and 1964. There's a clear trend in the statistics, but is that due to changes in the threshholds, changes in the economy, or something else?

This is admittedly speculation on my part, but I strongly suspect the growing civil rights movement had a lot to do with it. African-Americans were getting access to a lot more economic opportunity than they had in the past. So an entire subset of the population that was artificially repressed became less so. But again, that's mainly speculation on my part.

With respect to the minimum wage. First, simple logic tells us that if you increase the cost of doing business for a company, then something has to happen: the business has to cut costs somewhere or increase its prices.

Basically, you seem to be arguing that our economy absolutely requires a large pool of workers who don't make enough to live on. If that's indeed true, then our system is not one I have any interest in defending. If my relative success requires that others live in poverty as a necessary condition, then they system needs a serious adjustment, even if that's to my severe detriment. But that's just me, I suppose.

Yes, prices would have to increase and/or people be let go as a result in an increase in minimum wage, but over time, this would reach equilibrium. And, of course, with past increases in the minimum wage, there's simply no evidence that I've seen to indicate that the dire consequences you predict actually, you know, happened. :)

And you likely haven't increased the tax base - minimum wage earners are unlikely to pay any tax and many will receive the Earned Income Tax Credit and someone else will be earning less.

Certainly an opportunity for reform. And, of course, if you did away with regressive payroll taxes, replacing them with something more like the progressive income tax we have elsewhere, then there's no need for an EITC in the first place.

Now, it's hard to say what caused the initial increases in the unemployment rate from 5.6% in 1989 to 7.5% in 1992, or the decrease in unemployment in the three years following the last adjustment

No, it's actually not hard. It's called a "recession" and a subsequent "recovery." :)

but to rely on these statistics to argue that increasing the minimum wage does not have a negative economic impact, often on the very people it's intended to help, is unreasonable.

When you look at both the poverty statistics and the unemployment statistics, I don't think it's at all unreasonable to conclude that any such impact, if it exists, is too small to be measured.

Other, more successful businesses (and GM's own employees) would simply see more of their profits and wages go to taxes and a ballooning health care system, reducing everyone's take home pay

Not necessarily. The cost of such a government program would have to outpace the costs of private health insurance, which have been consistently going up at more than three times the rate of inflation. Even the government would have to work pretty hard to sustain that level of cost increase. (Of course, if the program is of the sort I've seen bandied about lately, where the government pays the private health insurance companies instead of replacing them, then they might just pull it off. Which is why I'm repeatedly on-record as wanting to make sure any such programs would be free of such corporate protectionism, like what currently plagues Medicare.)

Oh, I almost forgot:

More obviously, though, you have got to address what was actually done: what were the Great Society programs? When did any particular program begin, end, or change in some significant way?

You can see some basics about that here and in particular here. This tidbit, in particular, I find to be quite relevant:
Poverty among Americans between ages 18-64 has fallen only marginally since 1966, from 10.5% then to 10.1% today. Poverty has significantly fallen among Americans under 18 years old from 23% in 1964 to 16.3% today. The most dramatic decrease in poverty was among Americans over 65, which fell from 28.5% in 1966 to 10.1% today.
So it would seem that the most effective aspects of the program are those that dealt with children and especially seniors. What could have happened in the mid-1960's that could so drastically reduce poverty among seniors and children? I've got a pretty good guess.

It's admittedly complicated, but it's clear from looking at the numbers that something (or, more likely, several "somethings") happened in the 1960's to dramatically decrease the poverty rate in the US. While it's unfair for the War on Poverty to take all the credit (or even most of it), it's equally unfair to describe it as a "failure" or even as "ineffective."

[ As an interesting side note, the War on Poverty was killed by liberals and conservatives alike, in large part because racism was still rampant, there was a lot of post civil-rights-act backlash, and a widespread concern (technically true, if not unfair) that the programs were disproportionately benefiting poor urban blacks ("them" instead of "us"). It would be interesting to know what would be different today if those programs had continued rather than being killed; if we had a parallel universe to compare against, we might be able to settle which one of us is "right." :) ]

[tgirsch]

Also, while I'm thinking about it, given his stance of mistrust, and his position that the mere act of talking constitutes a concession of some sort, I can't imagine matt can be too happy with Bush's recent announcements regarding North Korea...

[matt curtis]

Tom,

But that is exactly my point: if you don't know how the thresholds were formulated or changed from year to year, or how the data was gathered or interpreted, then drawing conclusions about the poverty rate and the reasons for any apparent increases or decreases in the number of people living under the poverty level is an exercise in futility.

"This is admittedly speculation on my part, but I strongly suspect the growing civil rights movement had a lot to do with it. African-Americans were getting access to a lot more economic opportunity than they had in the past."

The problem with this speculation is twofold. First, the first Civil Rights Act was not passed until 1964, five years into the apparent downward trend in the poverty rate. Before passage of the Act and continuing into the late 60's there was still considerable racial tension. I'm not sure that there is any statistical data suggesting Blacks suddenly became wealthier as segregation was ended.

Second, desegregation may have theoretically opened opportunities to poorer Blacks, but that does not necessarily mean there were better paying jobs available. Logically, it would seem that their lot would be financially improved only if there was some degree of overemployment (i.e. more jobs than workers) or if they possessed skills that were in greater demand (unlikely because of the effects of segregation).

Consequently, I think your speculation is quite a stretch. It may be true, but I think you need to gather data to support your hypothesis.

"Basically, you seem to be arguing that our economy absolutely requires a large pool of workers who don't make enough to live on. If that's indeed true, then our system is not one I have any interest in defending. If my relative success requires that others live in poverty as a necessary condition, then they system needs a serious adjustment, even if that's to my severe detriment. But that's just me, I suppose."

It may be a reality of the economy that some workers will not earn enough to support themselves, but I don't believe it is a requirement. As it turns out, I suspect the data would show that the majority of minimum wage earners are employees just entering the workforce (such as teens) or retirees re-entering the work force. In both cases, these individuals typically don't have the same financial obligations and, in the case of teens, will not long remain at minimum wage.

The thing is, though, that if it costs an employer more to employ an individual than it does to go without that employee, then he isn't going to hire him. Similarly, if a position necessarily must be filled, but the employee must be paid more than he makes for the employer, then the employer will have to raise prices or cut costs elsewhere. Cutting costs, assuming optimal efficiency, means either lower wages for other employees or lower quality products. The result of demanding a "living wage" is to either shift that living wage higher because of higher prices or to move others down toward that living wage - ones that have invested more time and effort in their jobs then the new high school graduate has yet.

Your response to this above was to agree that it must be true, but to assert that it will eventually reach an "equilibrium". Please explain what you mean, how long it would take, and how exactly that would occur.

Next, I expected you might mention the recession. Of course, as an economy experiences less growth or negative growth, then you would expect the jobless rate to increase. The question is, though, what caused the recession in the first place. Were increases in the minimum wage a factor?

Now, let me address something that Milton Friedman is said to have described (my paraphrase). If you pay for a good with your own money, then you will value both price and quality. In other words, you will seek the best quality for the lowest price. If you buy something for someone else, then you are more likely to favor price over quality. Similarly, if you buy something for yourself with someone else's money, then you are more likely to value quality over price. Finally, if you use someone else's money to buy something for someone else then you are unlikely to value either price or quality - and consider how much less likely you are to value either if you don't personally know either the person who is paying or the person for whom you are buying. Apply this to health insurance and your proposal - you've just suggested the last scenario.

"What could have happened in the mid-1960's that could so drastically reduce poverty among seniors and children?"

Could it be government benefits distributed as part of the Great Society and counted as income that raised certain individuals above the poverty threshhold?

[matt curtis]

No, I'm not very pleased with Bush's actions on North Korea. I suspect we'll be faced with the same sort of nuclear blackmail by North Korea in a few years.

Tom, maybe you can tell us what we've gained here.

[tgirsch]

if you don't know how the thresholds were formulated or changed from year to year, or how the data was gathered or interpreted, then drawing conclusions about the poverty rate and the reasons for any apparent increases or decreases in the number of people living under the poverty level is an exercise in futility.

I disagree. As long as the standard is consistently applied, it's meaningful. In any case, the current standard for measuring poverty was developed in 1963-64. The methodology was relatively straightforward: it started with the cost of a diet that met the bare minimum dietary/nutritional requirements; it compared that figure against the best data then available concerning what percentage of their money families of various sizes spent on food to compute a multiplier; it then extrapolated from this to determine an after-tax poverty line.

(As an example, families of three or more generally spent about 1/3 of their income on food. So the cost of a barely nutritionally adequate diet was multiplied by three to come up with the after-tax poverty level for a family that size.)

This method started being used "unofficially" in 1965, and became the official measure by 1969. From 1969 on, the figure has been adjusted for inflation according to the consumer price index (CPI). The only tweak that has been made to the methodology since then is the elimination of a couple of categories (farm and female-only households) in 1981, but apart from that the methodology has remained consistent.

Two important additional things to note in the government's official poverty level: first, the poverty level is an absolute measure, based on ability or inability to pay for basic necessities (officially, "the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health"). This is as opposed to a relative poverty threshold, which compares an individual's or family's income against that of others. I suspect you'd prefer the former measure (the one we use) over the latter (the one we don't). Secondly, it's considered a measure of income insufficiency, i.e., it's not measuring "how much is enough," but "how much is too little."

(Source)

Consequently, I think your speculation [concerning the role of the civil rights movement in poverty reduction] is quite a stretch. It may be true, but I think you need to gather data to support your hypothesis.

That's fair, and that's why I said it was speculation. :) Then again, if not that, then what? And I will say that I think your timelines are off a bit. There's nothing magical about the passage of the civil rights act, in and of itself. If you're going to a point to a single, difference-making moment, it wouldn't be that. It would be Brown v. Board of Education, which prohibited segregation, and that was in 1954; plenty of time for the impact to start being felt in the late 1950's to early 1960's, even if desegregation was a long and arduous process that took decades (and, in some cases, is still incomplete).

Then again, while the statistics I've found are sparse, it would appear that African-Americans made up a larger share of the poor in 1966 than they did in 1959, meaning that my speculation would be dead wrong, and that whatever happened to reduce the poverty level happened at a greater rate among whites than among nonwhites. It wouldn't be the first (or last) time that I guessed wrong. :)

As it turns out, I suspect the data would show that the majority of minimum wage earners are employees just entering the workforce (such as teens) or retirees re-entering the work force. In both cases, these individuals typically don't have the same financial obligations and, in the case of teens, will not long remain at minimum wage.

But for purposes of my argument, it's not enough to look just at minimum wage workers. You'd have to look at everyone who works for an effective wage less than the living wage. I'm not so sure I'm willing to discard the seniors so cavalierly, but I'm certainly willing to disqualify teens for the purpose of this argument. But rather than using age, it might make sense to look at those who are working full-time, irrespective of age (with the notable caveat that many people who can't get full-time jobs work multiple part-time jobs to make ends meet; I'm not sure how to correct for this).

Your response to this above was to agree that it must be true, but to assert that it will eventually reach an "equilibrium". Please explain what you mean, how long it would take, and how exactly that would occur.

Well, I stipulated it, but I'm not sure I said it must be true. As for what I mean by "equilibrium," I mean that eventually you'd hit a point where the people who make the living wage (now the minimum wage) could afford the necessities, even though those necessities are now somewhat more expensive as a result of the minimum wage. As I alluded to before, to argue otherwise (as you seem to) is to argue that the necessities must be out of reach of the lowest paid workers, by necessity. If that's not required to be the case, then it stands to reason that over time it will work itself out. How? You're the market advocate, that answer ought to be obvious: the market will work it out. How long would it take? I can't say with any degree of confidence, but I'd be surprised if it would take more than a few years.

From where I sit, the people most likely to be hurt by such a plan, in the short term anyway, aren't those who currently work for at or slightly above the current minimum wage. It would be those who currently work for at or slightly above the new minimum wage; those workers wouldn't get a raise to compensate (at least not right away), yet their fixed costs would indeed increase. But I expect that this, too, would work itself out in time, and the history of past minimum wage increases seems to support that expectation (or, at the very least, it doesn't contradict it).

The question is, though, what caused the recession in the first place. Were increases in the minimum wage a factor?

Not that I can tell. For starters, the timing is all wrong. The minimum wage increases often occurred during the recession rather than before it. The best you could do is argue that the increases either prolonged or shortened a pre-existing recession, and I don't think there's a lot of evidence to support either conclusion. From what I can tell from looking at the data, recessions and recoveries are part of the cyclic nature of markets, and apart from dramatic "sea-change" style shifts, tax policies and minimum wage changes don't have any significant impact.

Now, let me address something that Milton Friedman is said to have described (my paraphrase).

You're not going to find me agreeing withe Friedman on a whole lot. Perhaps I'm the odd bird, but my behavior is almost exactly the opposite of what Friedman proposes in those differing circumstances. But that aside, your analogy misses what I consider to be an absolutely critical point: need.

Suppose you have something that is for all intents and purposes a necessity. It's not a nice-to-have, it's a have-to-have. Suppose, further, that it's a universal (or, at least, near-universal) need, meaning virtually everyone in the population shares that need. Now, suppose it's something that's unavoidably relatively expensive, such that a large percentage of the population simply cannot afford it out-of-pocket.

In circumstances such as those I've just described, markets fail, and they fail miserably. Because the need is near-universal, demand will always be high, putting upward pressure on prices. Even in the absence of that demand, the inherently expensive nature of the thing in question severely limits the amount of downward pressure that could be brought to bear. In such cases, the market's "answer" is that the thing becomes a luxury, whether or not it should be one.

Because the market simply cannot provide in these instances, this is where I argue that some degree of socialization makes sense. And I view things like education, roads, and health care to be examples of this. You're bound to disagree, but I defy you to show me examples of a society where free market principles alone have managed to provide quality education to the masses, or quality health care to the masses, rather than to just the top 50 or 60% of the populace. (In past debates with libertarians on this topic, the usual excuse is "it hasn't been tried [lately]"; I hope you won't follow the trend.)

Could it be government benefits distributed as part of the Great Society and counted as income that raised certain individuals above the poverty threshhold?

No, because most of the benefits granted by the government during that time were not cash benefits, and noncash benefits were not counted as income. (In the 1980's it was proposed that noncash government benefits should be counted as income, but these proposed changes weren't adopted in part because those proposing to do so wouldn't agree to also adjust the poverty levels accordingly.)

Tom, maybe you can tell us what we've gained here.

Don't look to me to defend this. I frankly think we gave up too much too quickly. I can see taking them off the state sponsors of terror list or relaxing some sanctions, but not both.

But I'd like to turn this around a bit. What would you want from North Korea before you'd offer what Bush did? It seems to me that your distrust runs so deep, that there's literally nothing they could do (short of maybe a total coup) to make us treat them differently than we have historically.

[tgirsch]

This seems as good a place to ask this as any: What do people think of the Iraqi government's recent demand for a timetable for withdrawal?

[matt curtis]

"As long as the standard is consistently applied, it's meaningful."

While it's true that the information is meaningful if the standard is consistent, the standard is consistently applied from year to year, and the data is similarly complete from year to year. However, if you don't know how the threshold is developed, don't know whether it's modified from one year to the next, don't know how different types of income are treated from one year to the next, or don't know if the data is as complete one year as it is the next, then the information may or may not be meaningful.

For example, as Great Society programs grew, was there access to greater numbers of data requiring less extrapolation of the number of people earning below the poverty level?

"cost of a diet that met the bare minimum dietary/nutritional requirements"

How was this figure derived? For example, I can think of expensive ways of meeting those minimum dietary/nutritional requirements as well as less expensive ways. Was this calculation modified at any point from one year to the next?

Do you think there was a vested interest within Johnson's administration to show positive results from his programs? The fact that there was a vested interest in seeing positive results doesn't mean the numbers were skewed, but it does mean that we should carefully review the methodology behind the statistics and data.

"first, the poverty level is an absolute measure, based on ability or inability to pay for basic necessities (officially, 'the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health')."

This may be an absolute measure in the sense that it's not relative to someone else's income, but there is a great deal of subjectivity within the definition - what is "healthy living"?

"How? You're the market advocate, that answer ought to be obvious: the market will work it out."

I think this an insufficient explanation of how your asserted "equilibrium" would occur. You're essentially arguing that higher retail prices for goods and services as a result of increased labor costs caused by increases in the minimum wage would be temporary and would not exceed the wage increase. You're going to have to offer some explanation for how that would occur beyond "the market will work it out".

"But I expect that this, too, would work itself out in time, and the history of past minimum wage increases seems to support that expectation (or, at the very least, it doesn't contradict it)."

If looking at historical jobless rates side by side with changes in the minimum wage is of some value in determining whether increases in the minimum wage have adverse effects on employment, would we not look at the recent increases in the jobless rates following the recent increases in the minimum wage? If you're going to argue those statistics when they're to your advantage, then you have to also accept them when they're to your disadvantage.

"From what I can tell from looking at the data, recessions and recoveries are part of the cyclic nature of markets, and apart from dramatic "sea-change" style shifts, tax policies and minimum wage changes don't have any significant impact."

Are you willing to concede then that Clinton's and Obama's promises to do something about the economy are empty promises?

"Perhaps I'm the odd bird, but my behavior is almost exactly the opposite of what Friedman proposes in those differing circumstances."

I doubt that if you were honest with yourself you would still conclude that your behavior is really so at odds with what Friedman proposed. I suspect that the closer the person is to you, the more importance you place on the quality or the nature of a gift. As the relationship becomes more distant, I suspect that you place less and less importance on the quality. Additionally, when you are spending your money on something you need personally or even just a personal hobby, you likely put more time and effort into choosing what to buy.

"In circumstances such as those I've just described, markets fail, and they fail miserably. Because the need is near-universal, demand will always be high, putting upward pressure on prices."

Markets actually work fine in responding to this. Higher prices encourages others to enter the marketplace (e.g. more students choose medical school because of the financial benefit to them of higher fees paid to doctors - even more so to certain specialties which are in higher demand). As more individuals enter the marketplace to provide the needed good or service, the supply increases. Increases in supply do what to prices? Greater supply equals lower prices.

"but I defy you to show me examples of a society where free market principles alone have managed to provide quality education to the masses, or quality health care to the masses, rather than to just the top 50 or 60% of the populace."

Do you have to look any futher than the U.S.? Admittedly, we have had socialized education for quite some time (with excellent results - er, maybe not so excellent), and our health care is socialized to a certain degree and becoming more so - to our detriment.

"No, because most of the benefits granted by the government during that time were not cash benefits...."

What were the benefits? Were there any new cash benefits or increases in existing cash benefits as part of the "War on Poverty"?

"What would you want from North Korea before you'd offer what Bush did?"

I would want to see positive and meaningful change in North Korea's policies. I don't see the sense in responding with benefits everytime North Korea starts rattling its sabre and then offers to stop rattling it in return for those benefits. What's that saying about a leopard changing its spots? Do you think there is any evidence that North Korea's leadership has had any change of heart?

[tgirsch]

Perhaps you are aware of qualified experts who have made sound arguments against the methods by which poverty is measured. I haven't seen anything of the kind. I haven't seen anyone prominent from any part of the political spectrum -- right or left, libertarian or authoritarian -- seriously question poverty statistics. It may well be out there, I just haven't seen it. If neither side of the debate has a serious issue with the numbers, or the manner in which the numbers are derived, then I guess my attitude is "if it's good enough for them, it's good enough for me."

That's not to say that you're not allowed to question the validity of the numbers. It's just that when the numbers have been in use for so long, and people on all sides of the issue seem to accept them as legitimate, it seems a stretch to me to put so much attention on questioning them. One could almost arrive at the conclusion that you feel backed into a corner, and the only way you can proceed is to question the legitimacy of the numbers themselves, since they otherwise contradict nearly every argument you've made here. ;)

This may be an absolute measure in the sense that it's not relative to someone else's income

"Absolute poverty" is a technical term, and not one that I made up. It's considered absolute because it's measured against a hard index (in this case, food cost), as contrasted against "relative poverty" which merely compares incomes. Of course, again, if these poverty statistics are unacceptable to you, I invite (and even encourage) you to present and defend a better metric, and we can discuss all these issues in the context of those numbers. But we have to start from somewhere, don't we?

I think this an insufficient explanation of how your asserted "equilibrium" would occur.

Of course it is! But pro-free-market people do it all the time! How come I don't also get to play? :(

More seriously, though, the reason I expect equilibrium to be reached is because there are only certain segments of the economy (e.g., fast food, retail, etc.) that are heavily dependent on low-wage and minimum wage workers. Large segments of the economy (e.g., information technology, health care, construction, manufacturing, etc.) already greatly exceed the current minimum wage, and therefore wouldn't be affected very much by an increase there. An increase -- even a dramatic increase -- in the minimum wage would have little direct impact on Toyota's bottom line, but would result in more people able to afford Toyotas.

Which is to say that the problem with your argument against minimum wage increases is that it incorrectly presumes that a minimum wage increase will cause prices to go up more or less evenly across all sectors of the economy -- an assumption which I believe to be absurd on its face.

Are you willing to concede then that Clinton's and Obama's promises to do something about the economy are empty promises?

It depends on what the "something" is. If they think simply changing the tax rates and minimum wage will have any lasting, significant impact on the economy, then I'd say yes, they're empty promises. Saying that modest-to-moderate tax policy and minimum wage law changes won't do much to spur or stifle economic growth isn't the same thing as saying that nothing the government can do will have any impact.

Just as an example, making energy independence the 21st century's Manhattan Project could go a long way toward spurring the economy, if properly funded. A renewed commitment to our country's crumbling infrastructure could be another way. What would be especially helpful about such initiatives is that these jobs are not easily outsourced. Most of them have to stay here, boosting the local economy.

And indeed, Obama has suggested something precisely along these lines -- a $150 billion energy package.

It's pretty simple, actually: when the economy is humming, the government should step back and get out of the way, apart from maintenance type stuff, and regulation to prevent Enron- or Countrywide-style abuses. When the economy's in the tank, that's the time for the government to step in with aggressive spending projects -- but not just any projects, useful projects like infrastructure and R&D -- to kick the economy back into gear.

I doubt that if you were honest with yourself you would still conclude that your behavior is really so at odds with what Friedman proposed.

I'm going to stand firm on this one. I am, and always have been, very careful about how I spend other people's money. As just a small example, I have never filed an expense report for an alcoholic beverage while traveling on business for any customer, even when company policy explicitly allowed it. It's not a necessary business expense, and therefore I don't claim it as such. To do so would be, in my mind, unethical. That's just one example, of course.

Of course, the Friedman analogy isn't a very good one anyway, because I can't even imagine a scenario in which I'm expected to buy a gift for someone I barely know using someone else's money. Further, in the government program example, it's not just other people's money that you're spending, but also your own money. So not a great analogy, in my estimation. Then again, I'm not a Nobel laureate, so what do I know? :)

As more individuals enter the marketplace to provide the needed good or service, the supply increases. Increases in supply do what to prices? Greater supply equals lower prices.

Yeah, that works great if you ignore startup costs and the costs of equipment and materials. But guess what? With health care, all of these costs are unavoidably high. You seem to believe that health care costs have the potential to go down a lot more than I think they actually do. Twenty percent of households currently earn $20,000 per year or less. After subtracting the cost of food, clothing, shelter, and transportation, just how much do you think such a family can really afford to spend on health care in a year? Over 40% of households earn less than $38,000 per year. Even at their relatively lofty status, how much do you suppose they can afford to spend on health care?

Even if health care costs were half of what they are today, most non-basic services would simply be too expensive for that bottom 40%, and they would either go in to financial ruin trying to afford it, or simply decide to go without. Which, interestingly enough, is precisely what's been happening in the health care market. Were it not for company-sponsored health plans that people can get through their employers, even fewer people would be able to afford access to anything other than the most basic health care.

Do you have to look any futher than the U.S.?

Yes, I do. Because if you look before we socialized education and health care, both were privileges of wealth. Granting the ever-so-remote possibility that the poverty statistics I provided earlier aren't worthless, Medicare and Medicaid drastically reduced poverty among seniors and children -- people who previously had to forego health care completely or live in poverty to get it now had access to it without having to go into financial ruin.

[ For what it's worth, the problem with skyrocketing health costs seems to have less to do with socialization and government regulation, and more to do with collusion in the insurance industry -- one of the reasons I'm not thrilled with Obama's health care plan, which merely perpetuates that industry's stronghold, and pays them with taxpayer dollars. I'd prefer to see the .gov eliminate the middleman and pay doctors and hospitals directly. I'm open to being convinced otherwise on this, however. ]

What were the benefits?

Mainly job training and job placement, with a splash of affordable housing.

Were there any new cash benefits or increases in existing cash benefits as part of the "War on Poverty"?

Possibly so, but I wasn't able to find anything about this. If there were, it seems that they were a small part of the program. It seems that the shift to cash benefits (what we traditionally think of as "welfare") began, ironically, under Nixon.

I would want to see positive and meaningful change in North Korea's policies.

Could you be a little less specific, please? :) Seriously, I thought I was clear on this, but maybe you could give a couple of specific examples of what might constitute a "positive and meaningful change."

[matt curtis]

Tom,

The problem I have with your use of the poverty statistics is not whether they have any value at all, but whether they are meaningful to our discussion. Understanding the definitions, data collection, etc. can be helfpul to determining how many people are living "in poverty" in a particular year. If, however, you're going to rely on annual poverty figures to say what effect the Great Society programs had, then you had better know whether the data can be appropriately applied to that type of analysis. If poverty was measured one way one year and tweaked the next year but you don't account for that modification, then your conclusions may be false.

In fact, your own statements above indicate that there were changes made in the method of determining the poverty level at the very point in time when the War on Poverty begins and there is a greater annual decrease in the number of people living below the poverty level than there was annually during the period of 1959-1964. You said:

"This method started being used "unofficially" in 1965, and became the official measure by 1969."

So, statistically we have the number of people living in poverty decreasing from 1959 to 1964 before adoption of Great Society programs, then we have, in 1965, the adoption of many of the programs AND a change in the way the poverty level is computed. You've also previously conceded that the available data appear to show that Blacks were not benefitting economically from the Civil Rights movement as you had earlier suggested as the reason for the reduction in poverty between 1959 and the start of the War on Poverty in 1964 or 1965.

Where does that leave us? You're presently unable to account for what was causing the reduction in poverty before implementation of the government programs. Consequently, you don't know whether the factors causing that reduction were likely to continue or accelerate into the mid and late 1960s. The method for determining the poverty level changed in 1965. Consequently, you don't know how the rate in 1965 should be compared to the rate in the previous year. And you don't know the extent of any cash benefits received by those in poverty during the mid to late 60's (or beyond) in order to evaluate the effect of any such payments on calculating the poverty rate.

It seems to me that you're drawing some pretty broad conclusions on limited information that actually suggests the conclusions are unfounded or at least suspect.

more later on the minimum wage, etc.

[tgirsch]

matt:
If poverty was measured one way one year and tweaked the next year but you don't account for that modification, then your conclusions may be false.

True enough. Which is why I went to great trouble to show that they were not tweaked, and were in fact consistently applied over the period in question. I think any neutral observer would agree that at this point, the onus is on you to show that the numbers aren't useful, and to suggest an alternate means of measurement.

In fact, your own statements above indicate that there were changes made in the method of determining the poverty level at the very point in time when the War on Poverty begins and there is a greater annual decrease in the number of people living below the poverty level than there was annually during the period of 1959-1964.

I don't think this means what you think it means. The method of computation was developed in 1963 (before the Great Society was implemented), went into common although unofficial use in 1965, and became official in 1965. Nothing about this, however, precludes the method from being retroactively applied. For your objection to hold water, you must not only demonstrate that there was a different method for measuring poverty before 1963, but that the pre-1963 numbers we have access to were arrived at by that older method, rather than by a retroactive application of the new method.

Indeed, we could come up with a whole new method of measuring poverty today, and as long as we agreed that the method was fair and reasonably accurate, and as long as we had sufficient data to do so, we could retroactively apply this new method, all the way back to 1959 (or as far back as we have good data).

Barring evidence to the contrary, I think it's fair to assume that the statistics listed -- all of them -- were arrived at by the same method. If that's not the case, then I'd agree with you that the numbers are useless, and that the historical tables are highly disingenuous if not intentionally misleading. But I see no evidence that this is the case.

The above in short form: I still think your objections to the statistics amount to much ado about nothing.

Tom,

I saw nothing in the Census Bureau website to suggest that the figures cited were based upon a common formula being applied retroactively to data collected originally. In fact, I would be rather surprised to find that that was the case. The clear impression I was left with is that the numbers cited are essentially raw data as reported year to year. If the cited statistics were obtained by retroactively applying the same methodology and formula to raw data, then you would be correct that we could place much greater confidence in the statistics.

The more important point in all of this, however, is what the numbers show (assuming your assertions are correct about the usefulness of the data) about the trend of decreasing poverty prior to the implementation of the first Great Society program.

[tgirsch]

me:
unofficial use in 1965, and became official in 1965.

Ugh. Became official in 1969.

Anonymous-but-probably-SteveC:

Looking at the footnotes to the statistics I cited, it seems that the truth lies somewhere in the middle. There are indeed some midstream adjustments in how things are calculated, but these are all documented. The first four changes (1967, 1971, 1974, and 1979) involve changes in the way the population was calculated, which could presumably throw off the percentages a bit, although I'd be surprised if it were dramatic. The method by which poverty was calculated was in fact adjusted in 1981, but that's well after the period we're talking about here. So, at a minimum, it would seem that the numbers from 1959 to 1966 were derived via identical methodology, and should be valid for purposes of this discussion (and I'd argue for at least 1973).

The more important point in all of this, however, is what the numbers show ... about the trend of decreasing poverty prior to the implementation of the first Great Society program.

What they show is that the while there was indeed a general downward trend in poverty prior to 1964, it accelerated dramatically after 1964, coincidentally with (if not directly because of) the passage of the Great Society Laws. The year-over-year drop in the number of people below 125% of the poverty rate, expressed as a percentage, was:

1959-1960: -0.7%
1960-1961: -0.5%
1961-1962: -2.1%
1962-1963: -4.4%
1963-1964: -1.9%
---Economic Opportunity Act Passed---
1964-1965: -7.3%
---Medicare and Medicaid Passed---
1965-1966: -10.6%
---Change in Census tabulation of population---
1966-1967: -5.0%
1967-1968: -8.4%

As you can see, the dropoff from 1964 to 1968 was dramatic. The reduction in the number of people living below 125% of the poverty level was -9.3% from 1959 to 1964 (-1.86% per year on average), and a stunning -27.9% from 1964 to 1968 (-6.98% per year on average). Thus, the yearly decline in poverty and near-poverty after the Great Society laws started passing was three times what it was before their passage.

It's even more dramatic if you ignore "near poverty" (below 125%) and look at actual poverty (below 100%, which requires some arithmetic, since the numbers aren't explicitly listed as such). There the 1959-1964 decline was -8.7%, and the 1964-1968 decline was -29.6%, almost three and half times as dramatic after the Great Society passed.

Looking at the numbers in more detail, and assuming for the sake of argument that there's no funny business going on with the numbers*, I think it's pretty clear what the big difference-maker was, and I alluded to it before: Medicare and Medicaid. When those came in there was immediately a huge drop in near poverty (-10.6%) and poverty (-14.1%).

Of course, this still leaves open the question of what was causing the downward trend in poverty that seemed to start in the late 1950's to early 1960's, and there's an admittedly-somewhat-cynical candidate that nobody has really addressed: Viet Nam. I wonder to what extent the draft in the run-up, and the casualties once we entered in earnest, had an impact. The poor, as they say, are always the first to go.

* Side note: If the numbers really were skewed to make those programs look better than they were, don't you think a hostile-to-government-programs administration, such as this one, would have revised them? The current administration has certainly shown no compunction in doing similar with, say, EPA reports...

[tgirsch]

Meanwhile, of course, between concessions to North Korea, a timetable for withdrawal from Iraq, and now talks (but not negotiations, we swear!) with Iraq, matt curtis's head must be about to essplode. :)

[matt curtis]

And so it goes again. N. Korea tests a nuke, makes a token gesture by tearing down a smokestack, and we reward them. Iran then tests a missile with sufficient range to hit Israel and American targets, and we step over the line we had drawn in the sand. All of this is hardly likely to convince Pyongyang or Tehran that moderation and more free societies are the way to go.

What would you like to see us achieve in N. Korea or Iran, Tom? Do you really think these actions on the part of the Bush administration are likely to accomplish those ends?

[matt curtis]

"Of course, this still leaves open the question of what was causing the downward trend in poverty that seemed to start in the late 1950's to early 1960's, and there's an admittedly-somewhat-cynical candidate that nobody has really addressed: Viet Nam. I wonder to what extent the draft in the run-up, and the casualties once we entered in earnest, had an impact. The poor, as they say, are always the first to go."

Tom,

The draft for the Vietnam War could hardly be responsible for the decreasing poverty rate. First of all, there was no large scale commitment of troops to Vietnam until 1965 with the arrival of the Marines at Danang - prior to that it was a small number of advisors. Moreover, I'm not sure that it would really have much of an impact, but any impact it did have would come beginning in 1965 through the build-up until mid 1969 when Nixon began withdrawing troops. I frankly don't know how long it took for the military to begin to shrink in size with the withdrawal of combat troops from Vietnam, or if it even did for that matter.

Rather than a phased withdrawal from this issue, I'll briefly sum up my arguments here and give you the last word on this thread - and I'll stick to it this time.

My overall point is that raising taxes and committing more money to social engineering ultimately is very unlikely to achieve its ends and more likely, in fact, to harm those it is intended to help. The free market is a far better and more efficient distributor of resources because the market actors have a stake in what is spent and what is purchased. This is true whether the good sought is a luxury item or a necessity. The more the demand for a good or service, the greater the incentive to provide that good or service with the resulting decrease in price - start-up costs may be an initial impediment but as consumer prices increase those costs become less an impediment.

I suspect that if we were to carefully break down access to quality health care we would probably find that there was greater access and health care was less costly 50 years ago than it is today. If that is the case, I think the primary factor in increasing health care costs is the ever increasing distance between the health care consumer (you and me) and the health care payor (insurance companies or the government). Before you cite Medicare as an example of government keeping prices lower than insurance companies, look at what has happened to the availability of doctors under Medicare - more and more are refusing to accept Medicare patients because the doctors cannot afford to treat them for the mandated Medicare prices. Moreover, those who do continue to accept Medicare patients undoubtedly shift some of their losses to privately insured patients. Admittedly, my statements here are largely based on anectdotal information I've heard from physicians as well as some primary source (newspaper) reports I recall from several years ago. But I also think the conclusions here stand to reason.

I think the minimum wage similarly fails to achieve its stated purpose. Its logical effect is to drive up prices. Even if those increased prices were to remain only within that sector of the economy with higher concentrations of minimum wage earners (I don't think this is a valid assumption - but I won't go into why here), it is that same sector of the economy where the low wage workers spend most of their income: food services and other service oriented businesses. So, they get a wage increase only to see an increase in the prices they must pay for the goods they need. And those are the lucky ones. The unlucky ones see their jobs lost as their employers cut jobs to deal with the increased cost of labor. Additionally, setting an artificially high price for labor disrupts the wage ladder; rungs on that ladder become spaced farther apart and raises occur less frequently. This is especially harmful to the entry level employee who does her job well, seeks greater responsibility, and becomes a real asset to her employer. The higher labor costs make it harder for the employer to award that employee with wage increases and therefore makes it harder to incentivize those workers. Again, test the logic here. I think an honest, critical analysis would show that it stands to reason.

Finally, let's look at these issues for a moment from a moral prespective. For the sake of argument, let's assume that increasing the minimum wage, establishing a "living wage" (whatever that really means), or implementing a universal health care system would actually achieve their goals and would actually lift those in the bottom economic tiers of our society up with no long-term injury to the very economy on which those individuals depend. Is it morally right to compel one man to give the fruits of his labor to another? What is the moral justification for such compulsion?

If you, having just been laid off from your job, needing a life-saving surgery you cannot afford, and having a wife and two children to feed, shelter, and clothe, see your former boss sitting beside you at a traffic light in his brand new $85,000 Mercedes on his way to the country club for late afternoon cocktails and a round of golf, are you justified in demanding from him, on threat of force, just enough money to pay for the operation and the month's rent and grocery bill? Why or why not? If not, then how is this qualitatively different from government programs that redistribute wealth from one group to another group? If your response is something along the lines of "that's just how government works", "the wealthy receive some benefit from it", "no one should go without such necessities", "it reflects the will of the majority", and/or "everyone voluntarily submitted to that system", then please justify that response. Finally, if your response is something to the effect that we have a moral obligation to provide for those less fortunate (with which I agree), then please explain the basis for compelling another man to act in accordance with your moral code. Upon what authority would you compel another to act morally? If you conclude that a majority can compel a minority to act morally, then would not that same reasoning justify "Blue laws", prohibitions on same-sex marriage or abortion, or state censorship of pornography?

[tgirsch]

My overall point is that raising taxes and committing more money to social engineering ultimately is very unlikely to achieve its ends and more likely, in fact, to harm those it is intended to help.

I understand that this is your point. The problem is, you haven't presented any evidence apart from your say-so to back it up. You've gone on at great length about why the evidence I've supplied shouldn't be considered valid, but when it comes to actually making an affirmative case for your point of view, you've done very little. Which is a little disappointing, actually.

I suspect that if we were to carefully break down access to quality health care we would probably find that there was greater access and health care was less costly 50 years ago than it is today.

Setting aside the fact that it was also a lot less advanced back then, I'd be surprised to learn that there was "greater access." My suspicion is that then, as now, a lot of people simply did without based on necessity. Less costly? Sure, but then so was everything else.

I think the primary factor in increasing health care costs is the ever increasing distance between the health care consumer (you and me) and the health care payor (insurance companies or the government)

I won't dispute that point, actually. Our current structure does serve to make a bad situation worse. The inherent assumption in your argument, however, is that in the absence of this arrangement, health care wouldn't just be less costly; it would be affordable to the overwhelming majority of people who needed it. I don't see that assumption ever being true. Even if you ran health care as an exceptionally efficient not-for-profit, it's just too inherently expensive to be broadly accessible in anything other than its most basic form (e.g., vaccinations, yearly checkups, and other forms of caring for the healthy).

I think the minimum wage similarly fails to achieve its stated purpose. Its logical effect is to drive up prices. [and increase unemployment.]

Now, if only you could provide documentary evidence that (A) it actually does so; and (B) the amount by which it does so overshadows the amount of the minimum wage increase -- well, that would help your argument a lot. As I've pointed out (and backed up with statistics), past minimum wage increases haven't had the dire consequences you seem to want to attribute to them. They also haven't been as effective as I'd like, but I suspect that has a lot to do with their failure to keep up even with the rate of inflation. (If the minimum wage had kept pace with inflation since the 1960's, it would currently be up around $10/hour.)

Basically, historically speaking, where the rubber has hit the road in the past, the increases in prices and "spikes" and unemployment associated with minimum wage increases have been small, and even described by some as "statistically insignificant."

Is it morally right to compel one man to give the fruits of his labor to another? What is the moral justification for such compulsion?

You tell me. We do it all the time for the support of things like roads and education and medical research and all manner of initiatives designed to benefit the greater good (not to mention more dubious prospects, like war). Why should something like health care be any different? And turn it around for a minute. If your relatively lofty standard of living is dependent upon other people making substandard wages where they can only barely get by or must give up basic needs in order to get by, please explain to me how that's morally right? What's the moral justification for that? Sorry, but "not my problem" or "the market decided they should be poor" don't cut it as explanations.

And you continue to disparage the term "living wage" as if it's difficult to understand. It's really quite simple. At what wage can a person who works a full-time job afford a roof over their head, clothes on their back, food in their mouth, and health care when they need it? That's the living wage, period. That you continue to argue that our very economy depends on having lots of jobs that don't meet those most basic of standards strikes me as, frankly, cold, and decidedly un-Christian.

Finally, I'm underwhelmed by your attempts to paint taxation -- a collective endeavor which we institute and maintain democratically -- as quite literally robbing Peter to pay Paul. Is it right to stop that same guy in the $85,000 Mercedes and force him to fork over his share of $90 billion to pay for a war he doesn't support? When you paint it like that, all taxation is wrong, all government action is immoral, etc. Not a terribly useful foundation for a worldview, in my estimation.

Libertarians often seethe at the suggestion that they're really just anarchists who lack the intellectual honesty to admit as much, but you're making a pretty solid case here. :)