Curmudgeonocracy 12—Discussion

“It appears, Curmudge, that conservatives and progressives agree on something.  They both want Americans to live well, and in addition, to have a safety net for those who are unable to support themselves.”

“Sounds good so far, Julie, but then they diverge.  Conservatives want ‘living well’ to be based on economic growth such that everyone who is able to work can find a job.  And ‘living well’ means having the freedom to live as he/she wishes and as prosperously as he/she can afford.”

“Based on our readings, progressives see it differently.  They feel that an all-powerful central government can make better decisions than individuals.  This reduces inequalities, but as Churchill said, provides for ‘equal sharing of miseries.’  Nevertheless, in the U.S. in recent years the administrative state has forged ahead with ‘over-regulation, cronyism, institutional sclerosis, and mounting public debt’ (Levin in preceding posting).  Despite this sorry record, the progressives portray themselves as helping the middle class.”

“As I see it, chère etudiante, the more people they can get feeding at the public trough, the more people will be depending on and supporting the progressives.  Here are some data: ‘In 1960, According to the Office of Management and Budget, social welfare programs accounted for less than a third of all federal spending.  Today (2013) entitlement programs account for nearly two-thirds of federal spending.’  ‘Welfare spending is nearly twice as much as defense, justice and everything else Washington does—combined.’  ‘The Department of Health and Human Services reports that more than 12.4 million working-age Americans obtained income disability support from government programs in 2011.  That’s more than the total number of employees in the manufacturing sector of the economy.’ (1)  Yet after spending several years in a corporate Environment, Safety & Health Department, I know personally that the American workplace is becoming increasingly safety-conscious.”

“Another way that the progressives hope to gain support is to raise the minimum wage from $7.25 to $10.10.  But the Congressional Budget Office estimates that the change would eliminate 500,000 jobs.  Gosh, Curmudge, it seems that progressives care more about catchy themes that attract votes than they care about people.  More facts from research: 25% of hourly employees in poverty already earn $12 per hour or more.  Only 18% of the benefits from the proposed increase would go to minimum-wage earners living in poor families. (2)  And for young people hoping to climb the ladder of success, a higher minimum wage makes the first rung harder to reach.”

“To neutralize the voter appeal of a higher minimum wage, Wilcox in Room to Grow and Saltsman in The Wall Street Journal (2) have proposed modifying the earned income tax credit (EITC).  The EITC is a refundable tax credit for low-income households.  The modified plan would increase the credit received by childless adults.  Other approaches to fighting poverty are the block grants described by Winship in RtG, termed federal opportunity grants by Paul Ryan. (3)”         

“I think I know where you are heading, Old Guy.  Although middle class Americans are aware of the miseries of socialism, they—like many Europeans—have been seduced by big government’s handouts.  They will be reluctant to break the ‘big government’ habit ‘cold turkey.’  That’s why several of the YG Network’s proposals in Room to Grow are less rigorous than desired by other conservatives.  YG Network people want to gently wean middle class people away from big government.  To be even-handed, let’s consider what dyed-in-the-wool conservatives favor.”

“As you wish, Julie.  The title of Daniel J. Mitchell’s paper is the same as his conclusion, Tax Credits Won’t Lift Economic Growth. (4)   He said there is no evidence of a positive economic outcome.  ‘And since tax credits have little or no effect on incentives to work, save and invest, conservatives won’t be able to make an argument about the less fortunate benefitting from faster growth.’  ‘The more effective policy is to boost economic growth so that families have more income in the first place.’  Mitchell’s conclusion is to ‘focus on reforms that boost savings and investment, such as lowering the corporate tax rate, reducing the double taxation of dividends and capital gains, and allowing immediate expensing of business investment.’ “

“Somehow, Professor, I doubt that Mitchell’s last sentence will strike a chord with a mother on welfare.”

“Let’s end this posting with a few suggestions from George P. Shultz on How to Get America Moving Again (5): Cleanse the personal income tax of deductions.  Lower the corporate tax rate to be competitive with the rest of the world.  Overhaul the complexity of the regulatory octopus.  Have a robust military capability.  Get control of spending, especially entitlement spending.  Index the normal retirement age to longevity.  Shultz had several suggestions on health care; we’ll revisit them when we next write about that subject.  But here they are briefly: Have high-deductible catastrophic insurance available across state lines.  Encourage health-savings accounts to be used in paying for routine medical services.  Have price transparency for medical services.”

“I read, Curmudge, where someone said in a subsequent letter to the editor, ‘Shultz’s ideas are great, but we need the right leader to make them happen.’ “

“Agreed!  A dynamic communicator.  As Margaret Thatcher said, ‘First you win the argument; then you win the vote.’ ”

Kaizen Curmudgeon

    

(1)  Eberstadt, Nicholas  Yes, Mr. President, We Are a Nation of

Takers The Wall Street Journal, 1/25/13.

(2)  Saltsman, Michael            A Better Poverty Fighter Than Raising the Minimum Wage The Wall Street Journal, 8/12/14, p. A13.

(3)  Ryan, Paul  A Better Way Up From Poverty The Wall Street Journal, 8/16/14, p. A11.

(4)  Mitchell, Daniel J. Tax Credits Won’t Lift Economic Growth The Wall Street Journal, 8/21/14, p. A13.

(5)  Shultz, George P. How to Get America Moving Again The Wall Street Journal, 8/09/14, p. A11.   

Link to posting from blog archives: Way to go!—The value of an advance directive.—2/17/11 http://kaizencurmudgeon.blogspot.com/2011/02/way-to-go.html

Curmudgeonocracy 11—“Room to Grow”

“Promises, promises, promises.  So, Curmudge, we’re finally going to say something about Room to Grow.  It’s about time.”

“Actually, Julie, we don’t have to say very much.  The complete e-book is available, free of charge, to anyone with a computer.  Nevertheless, I’ll provide a brief overview.  The authors—one for each chapter—are members of the YG Network (YG stands for ‘Young Guns’).  They consider themselves to be moderate conservatives, and they have been considering ways by which our government might be modified to better meet the needs of middle-class Americans.  The chapters of the book contain their individual recommendations.”

“I understand that you have found several articles about Room to Grow and the YG Network.  Reading these as well as chapter summaries will save the busy person from having to read the whole book.  Perhaps, Old Grey Fox, you should write your own book on ‘How to Succeed in Writing Without Really Reading.’  So here are the equivalents of SparkNotes or Cliffsnotes on Room to Grow: an article by Mona Charen in the 6/05/14 Chicago Sun-Times; and a longer article on the YG Network by Sam Tanenhaus in the 7/02/14 NY Times Magazine.”

“Although health care is addressed in Room to Grow (RtG), we discussed that topic in several postings two years ago.  In the near future we’ll revisit it and include RtG’s insights.  So here are some other subjects—and their authors—covered in RtG:

The Anxieties of Middle America—Peter Wehner: ‘The chief fear of middle-class

Americans is that just as it is getting harder for poor people to climb into the middle class, a stagnant economy is making it all too easy for those who have achieved middle class status to fall out of it.’  ‘Conservatives must offer a concrete conservative agenda that tackles the barriers to upward mobility, and that renews faith in free enterprise and our constitutional system.’

Governing Vision—Yuval Levin: ‘America’s families face stagnating wages, excessive tax burdens, rising health and higher education costs, barriers to mobility and work, disincentives to marriage and childbearing, and an economy increasingly held back by over-regulation, cronyism, institutional sclerosis, and mounting public debt. And each of these problems has been greatly exacerbated by a federal government that is overreaching, hyperactive, unwieldy, and immensely expensive.’  ‘The conservative reform agenda aims to replace a failing liberal welfare state with a lean and responsive 21st century government worthy of a free, diverse, and innovative society.’

Tax Reform—Robert Stein: ‘Conservatives should offer tax cuts to reduce the cost of raising children.’  ‘By supporting tax relief for parents when they need it most, conservatives could do more than correct a distortion in the tax code.’

K-12 Education Reform—Frederick Hess: ‘The Right should take the lead in liberating teachers from regulations that make it extremely difficult to do their jobs well -- a step that will help demonstrate that while conservatives often oppose teachers unions, they are not opposed to the interests of teachers.’

Higher Education Reform—Andrew Kelly: ‘We must support occupational opportunities, like high-quality apprenticeship programs that provide the

non-college-bound with real-world skills.’

 Safety-Net Reforms—Scott Winship: ‘Though federal and state spending on anti-poverty programs is in the neighborhood of a trillion dollars a year, millions of Americans remain stuck at the bottom of the economic ladder.’  ‘Conservatives have advanced a number of poverty-fighting ideas in recent years, including a unified anti-poverty block grant to the states or a universal credit that would consolidate various anti-poverty programs. Conservatives would do well to couple welfare reforms with a robust economic-growth agenda.’

Employment Policies—Michael Strain: ‘Roll back licensing requirements; offer relocation assistance in place of continued unemployment benefits; temporarily lower minimum wages for the long- term unemployed with a temporary subsidy; offer tax credits for those hiring long-term unemployed; promote worksharing programs to prevent layoffs; and expand the earned-income tax credit to make work more attractive to childless workers.’

Energy Reforms—Adam J. White: ‘Congress must undertake serious oversight of regulatory agencies, to deter officials from misusing their power and improperly administering the laws.’  ‘Americans must finally be given a voice charting the

nation’s energy future, instead of having radical new energy policies imposed upon them by regulators and ideologues.’

Reforms to Help Parents Balance Work and Family—Carrie Lukas: ‘When greater flexibility and more options are what most women crave, one-size-fits-all government solutions can take society in the wrong direction.’  ‘Policymakers should focus on creating an environment so that women can pursue their vision for happiness and raise their children as they see fit.’

Combat Cronyism—James Pethokoukis: ‘The federal government must cease to offer protections to politically influential businesses that shield them from the upstart rivals that, if given half a chance, could make America’s economy more innovative and productive.’  ‘Innovators should be given the room they need to experiment with new business models without fear of running afoul of incumbent-protecting regulations.’

Pro-Family Policies to Strengthen Marriage—W. Bradford Wilcox: ‘Ending the marriage penalty associated with means-tested public benefits would be a good first step toward reversing the decline of marriage. Reforming the earned-income tax credit by tying it to individuals rather than households would ensure that when one low-wage worker marries another, neither would experience a loss of income. Expanding the child tax credit to $4,000 would give a boost to married couples further up the income scale.’

Recovering the Wisdom of the Constitution—Ramesh Ponnuru: ‘The federal government has taken on more and more responsibilities, inserting itself into every nook and cranny of American life, yet it seems incapable of performing even the most basic tasks competently. Corporations face multiple regulators. Presidents revise laws without bothering to consult Congress. Federal agencies wield massive authority while facing little in the way of accountability. The limited but effective government envisioned by the Founders bears almost no resemblance to the chaos that now reigns.’  ‘Restoring something like constitutional government is a task that will take generations, and it will have to be undertaken by citizens and legislators as well as by courts.’ “

“Wow, Curmudge! elp Herlp Parents Balance Work and Family That’s a bunch of stuff to think about.  In our next posting we’ll bring in some additional thoughts about Room to Grow and then try to summarize curmudgeonocracy.  After that, we may be due for a vacation.”

Kaizen Curmudgeon

Link to posting from blog archives: The Middle Years—2/09/11

http://kaizencurmudgeon.blogspot.com/2011/02/middle-years.html

Curmudgeonocracy 10—“The Fourth Revolution”

Scandinavia as Discussed by Micklethwait and Wooldridge

“In The Fourth Revolution, M&W view Sweden in a more positive light than we (actually, the Swedish think tank, Captus) did in our 6/27/14 posting on socialism.  ‘Sweden just put its pension system on a sound foundation, replacing a defined-benefit system with a defined-contribution one and making automatic adjustments for longer life expectancy.  It has reinvented its state as well as reduced its size.’ “

“You’ll like this, Curmudge.  They have introduced Lean, the Toyota production system, in St. Gören’s Hospital in Stockholm.  That’s the same Lean that we wrote about for five years.  ‘The focus at St. Gören’s is on reducing waiting times and increasing throughput.’  That seems consistent with a recent article (1) that states, ‘Months-long waiting times for treatment routinely available in the U.S. have been widely documented.’  Nevertheless, according to M&W, ‘Sweden has done most of the things that politicians know they ought to do but seldom have the courage to attempt.’  They also point out that (all) ‘the Nordic countries provide strong evidence that it is possible to contain government while improving its performance.’  Let’s hope that that is not limited to small, relatively monolithic societies.”

America’s Problems As Seen by M&W

“Julie, a few days ago I mentioned to an acquaintance that I had written about the achievements of Margaret Thatcher and Ronald Reagan, and he walked away in apparent disgust.  That suggests that there are some highly educated people who must be oblivious to the mess that our government has become.”

“Your acquaintance is probably not a fan of our blog, and he certainly wouldn’t like Micklethwait & Wooldridge’s book.  Like them or not, here are some of the problems noted by M&W:

The national debt: ‘The declared national debt is around $13 trillion, but the federal government’s off-balance-sheet commitments in 2012 came to $70 trillion.’

The tax code: ‘Four million words, containing subsidies, exemptions, and complications that favor the rich, such as the deduction for interest on a home mortgage.’  (Think of a person who can afford a multi-million dollar home deducting his mortgage interest.)  ‘Tax loopholes and exemptions are collectively worth $1.3 trillion.’

Entitlements: ‘Equality of opportunity has become equality of results.  Fraternity has become about entitlements that we are all due, not responsibilities that we all have.’  ‘The more the state fails to meet its impossible targets, the more it resorts to micromanagement to make up for its failures.’

Crony capitalism: Well-connected industries receive mammoth subsidies.  ‘The U.S. Dept. of Agriculture (USDA), with 100,000 employees, provides $10-$30 billion in cash subsidies to farmers each year.  The largest 10% of farmers received 68% of all commodity subsidies in 2010.’ “

“And the list can go on and on, Julie.  Our government has become bloated and inefficient, yet voters seem to want more services with lower taxes.  The authors are concerned that the state will keep expanding and reducing liberty and that it will surrender more power to special interests.  Plato’s two criticisms of democracy remain valid: Voters will put short-term satisfaction above long-term prudence and that politicians will try to bribe their way to power—as they have done by promising entitlements that future generations will have to pay for.  And as stated by M&W, ‘Reform is as much about changing mentality as about redesigning structures.’ “

Micklethwait & Wooldridge’s Thoughts on Improvement

“According to the book, Old Guy, M&W’s starting point is classical liberalism.  ‘We want the state to be smaller and individuals to be freer.’  They list ‘three areas for unburdening the state: (a) selling things that the state has no business owning, (b) cutting the subsidies that go to the rich and well connected, and (c) reforming entitlements to make sure that they are targeted to people who need them and sustainable in the long term.’  The Department of the Interior oversees 260 million acres; the agricultural land (but not national parks) could be sold.  The government owns more than 900,000 buildings, many of which are underused or unneeded.  The need to reform entitlements is widely recognized, but actually doing something faces a lot of inertia.  This situation was described by the former prime minister of Luxembourg: ‘We all know what to do, but we don’t know how to get re-elected once we have done it.’  So, Professor, how do M&W wrap up their story?”

“They remind us what John Adams said about democracy 200 years ago: ‘It is in vain to say that democracy is less vain, less proud, less selfish, less ambitious, or less avaricious than aristocracy or monarchy.’  ‘These passions are the same in all men…and when unchecked, produce the same effects of fraud, violence, and cruelty.’  With that as history, M&W observe that ‘the welfare state has sprawled and democracy has become self-indulgent, tawdry, and, too often, corrupt.’  It will be difficult to convince people that the state will become stronger by being leaner and offering fewer benefits, but the survival of our democracy may depend upon it.  ‘Any state that harnesses the most powerful innovative forces in society will pull ahead of its peers.’  That has been shown by history.  ‘The West has been the world’s most creative region because it has repeatedly reinvented the state.’ “

“I hope that state is us, Curmudge.  Presumably we’ll defer our discussion of the e-book, Room to Grow, to our next posting."

Kaizen Curmudgeon      

(1)  Atlas, Scott W.  The Wall Street Journal 8/14/14, p. A13.

Link to posting from blog archives: Stan’s Story Redux—12/29/10

http://kaizencurmudgeon.blogspot.com/2010/12/stans-story-redux.html

Curmudgeonocracy 9—Books that Summarize and Inspire

“I understand, Curmudge, that our remaining discussions on curmudgeonocracy will be based on books.  Heretofore they have been based on bits and pieces of info from Google, Forbes, The Wall Street Journal, and a professional career in chemistry, quality management, and regulatory compliance.  Although you did take a course in government 60 years ago.”

“It was required, Julie.  Classes were at night after work in Cleveland.  I read the text over weekends while sitting on the bank of Lake Erie wishing it were clean (the lake, not the text).  Now I read sitting at my table in—as you call it—the old folks home.  The books of current interest are Why Government Fails So Often by Peter H. Schuck, The Fourth Revolution by John Micklethwait and Adrian Wooldridge, and Room to Grow by the YG Network.  Actually, our discussion of Schuck’s book will be based on a review (1); it’s also reviewed on Amazon.  I didn’t buy the book, but I should have.  My head had already been filled with examples of government failures.”

Why Government Fails So Often

“We’ve already noted several examples of government failures in our Curmudgeonocracy 6, 7,and 8 postings, Curmudge.  If Schuck also describes them, why beat a dead horse?”

“Because it’s not dead, chère etudiante.  It’s alive and well and living in Washington.  Also, it’s reassuring to learn that Schuck agrees with our observations.  In his review, Levin says (quoting Schuck) that to be successful, public policy must get these things right: incentives, instruments, information, adaptability, credibility, and management.  And our government is bad at all of them.  (I’m tempted to buy the book to get more details.)  Shuck also said that, ‘it is essentially impossible for centralized managers to consolidate information to the degree necessary to manage complex social systems.’  And when they fail, bureaucracies demand more power.”

“Hey, Old Man, we said that in our recent discussion of Hayek and Friedman; and also in our posting on Complex Systems two years ago.”

“Also echoing Hayek, Schuck said, ‘When one compares government and market provision of essentially the same services, the inescapable conclusion is that the (free) market almost always performs more cost-effectively.’  But private companies do not totally escape blame.  They have been known to use political contributions to influence policies that might give them an advantage over competitors.”

“Here, Curmudgde, is a final quotation from Schuck’s book: ‘The relationship between government’s growing ambition and its endemic failures is rooted in an inescapable structural condition: officials’ meager tools and limited understanding of the opaque, complex social world that they aim to manipulate.’ “

“Julie, I guess that means that there are a lot of things that big government cannot do well and probably shouldn’t attempt.”

The Fourth Revolution:

The Global Race to Reinvent the Stateayek, Schuck said, ‘h

 

“Wow, Curmudge!  The book by Micklethwait and Wooldridge (M&W) is 270 pages of fine-print text and 18 pages of references.  You said it took two weeks to read, and you wore out a highlighter.  At least it kept you off the streets and out of the bars, of which Appleton has an abundance.”

“Correct as usual, Julie.  The early part of the book is sort of a textbook of political history; we touched on some of that in our earlier Curmudgeonocracy postings.  So from M&W we’ll just list dates, dominant concepts, and influential authors.   Overall, the book’s observations regarding the ills of big government parallel those noted by Schuck.  You and I should be pleased that there are prestigious authors out there who agree with us that our government is a mess (their word).”

“So here, Professor, is M&W’s political history in a nutshell:

The politics of the 16^th and 17^th centuries emphasized sovereign power.  In his book Leviathan Thomas Hobbs obbsHhintroduced the modern nation-state and the idea of a social contract between ruler and ruled.  War was endemic, and people chose to associate with one another out of fear for their safety.  The state’s first duty was to provide law and order.

 
But as the nation-states evolved in Europe, power became concentrated in the landed gentry who acquired wealth via ‘old corruption.’  In the 19^th century John Stuart Mill, William Gladstone and others in Britain led ‘a silent revolution that replaced the ancient regime of privilege, patronage, and purchase with a capitalist state.’  At the end of the century Gladstone said, ‘If the government takes into its hands that which the man ought to do for himself, it will inflict upon him greater mischiefs than all the benefits he will have received.’       

Beatrice Webb thought otherwise.  She believed in an ever-expanding role for government including ‘collective ownership wherever practicable and collective regulation everywhere else’ including managing people’s breeding habits.  The triumph of statist thinking in Britain was repeated around the world, including Russia and Germany as communism and fascism.  By the time Beatrice Webb died in 1943, Britain had plans for destroying the ‘five great evils’ of want, disease, ignorance, squalor, and idleness.  The 1960’s saw the apogee of the state’s being the ‘universal provider’ in Britain.  It was becoming evident that ‘the man receiving the welfare check or the state pension was not grateful; it was a right—and he was entitled to it.’ “

“Good recitation, Julie.  And of course we’ve already discussed the more recent history of socialism in Great Britain in our 7/06/14 posting.  Let’s now look at M&W’s comments about the U.S.—I actually remember most of the events—and their further observations about Britain:

‘By the 1970’s the American government seemed to be failing at everything it touched—wars (Vietnam), the economy (stagflation), crime (the drug epidemic), social cohesion (the culture wars).’  Big government had overextended itself, consistent with Lyndon Johnson’s statement, ‘We’re in favor of a lot of things and we’re against mighty few.’  Urban planners tore down working-class neighborhoods and ‘shoved the poor into “the projects,” vertical ghettos.’  In Chicago the Guardian Angels (including Doc Mack, one of our editors) rode the ‘El’ to protect riders from crime.  But the Guardian Angels regarded “the projects” too dangerous to enter.  The time had come for Margaret Thatcher in Britain and Ronald Reagan in the U.S.  Although Reagan was able to revive the economy with tax cuts, he could not convince Congress to enact cuts in spending.  Nevertheless, in 1992 Bill Clinton proclaimed that ‘the age of big government was over.’  But it wasn’t.”

“Next, Old Man, let’s catch a flight to Asia on an M&W 777 and hope it doesn’t disappear over the Pacific.  In their discussion of Asia, M&W examined two countries; Singapore as a model and China as a potential competitor.  Both countries believe strongly in efficient government.  Those who work in government in both countries receive extensive training, including back-and-forth stints in government and industry.  A Chinese official was amazed that U.S. foreign policy is managed by (domestic) politicians.

‘Singaporeans pay a fifth of their salaries into the Central Provident Fund, with their employers contributing another 15.5%.  That provides them with the wherewithal to pay for their housing, pensions, and health care.’  In this way the state is kept small, and people are responsible for their own welfare.

‘The Chinese state is a paragon of efficiency—especially compared with the fevered gridlock of Washington or the panicky incompetence of Brussels.’  On the negative side, the Chinese state (in actuality, the Chinese Communist Party) is involved in everything and is permeated with elitism and corruption.  However, after describing China’s problems in detail, M&W conclude that ‘the Asian alternative is undoubtedly the most substantial challenge that the Western model has ever faced.’ “

“I propose, Julie, that we catch a flight back to the Western Hemisphere and take a few days off to cure our jetlag.  In our next posting I hope to wrap up The Fourth Revolution and tackle Room to Grow.”

Kaizen Curmudgeon       

     

(1)  Levin, Yuval  Review of Why Government Fails So Often by Peter H. Schuck, in The Wall Street Journal 6/10/14, p. A13.

Link to posting from blog archives: Superbugs—11/04/10 http://kaizencurmudgeon.blogspot.com/2010/11/superbugs.html