Wednesday, August 18, 2010

 

Leading with my chin, I commented on Matthew Yglesias's blog that some popular soak the rich policies made up " the soundest policy agenda in the world." Turning his snark to it lowest level (don't be to hard on fools no one has heard of) Matthew Yglesias worries about squeezing Medicare too much and adds that his policy agenda includes a carbon tax and a reduced military budget.

So what would I add to get to a really sound policy agenda ignoring politics entirely ?

1. Carbon tax check
2. Cut the defence budget (in half or maybe by a factor of 4) check

and

3. Increase centralised (education department) funding for K-12, introduce national curriculum guidelies, and implement high stakes but not stupid testing. The USA has amazing inequality in learning far surpassing other developed countries. This causes inequality and reduces class mobility and something ought to be done about it (but won't).


4. let prisoners go. The USA has a huge immense incarcerating rate causing immense suffering (and costing a lot). Some of this is due to absurd policies like three strikes and you're out. Much of it is due to overestimates of the additional deterrent effect of severe punishment (or more likely desire for revenge sincerely perceived as belief in deterrence). More is due to a crazy war on drugs. It is possible to have less crime and less punishment. Don't ask me how, ask Mark Kleiman.

5. reform welfare reform. Welfare reform is considered to be a great success, because everyone decided the question was closed by 2000. Some said it was hard to tell what was welfare reform and what was the late 80s boom. It isn't hard anymore. More than all of it was the boom. The severe poverty rate is much higher than it was at the trough of the 74-75 recession. People are suffering, because a majority just refuses to accept the facts.

6. Increase the foreign aid budget 10 fold (that would bring it up to 1.2% of GDP). We can spare the money. We don't have to make the mistakes foreign aiders made in the past. Does it make sense to choose between treating AIDS (which reduces transmission) and treating TB ?

7. No aid to rich farmers -- that means no price supports, so the program should be aid to farmers with dependent children (back when I was young and naive I expected farmers would be less self righteous if they were given cash but they are not at all embarrassed).

8. Single payer public health insurance. Still sound policy even if it is way off any practical agenda. Seriously what about trying for Medicare buy in ?

9. Merge NASA and the NSF (that is close NASA and give its budget to the NSF). If a space progect is sound science, space grant applicants should be able to make the case on purely scientific grounds.

10. Stop wasting money on missile defences which work as well as North Korean missiles.

11. Outsource the war in Afghanistan to Afghans. We are spending many times their GDP. Surely we can find warlords willing to do it for less.

12. Eliminate all tariffs on imports. Anyone who hates inequality should hate them.

13. Eliminate all restrictions on immigration.

14. Be practical.

posted by Robert permalink and comments7:56 PM

Comments:

I have a question about #12: what about the Gomory and Baumol thesis about competitive trade and the connected idea that it matters what you make. In other words, the claim would be that tariffs could be used to create an economy structured so that more people get good jobs?

This has been floating around; I'm greatly interested in your view.

# posted by  Anonymous : 3:57 AM

 

Response to comment below. I think a country can benefit by protecting high wage industries. The basis for this view is a paper by Larry Katz and Larry Summers not entitled "Do interindustry wage differentials justify strategic trade policy." That was the running title but Summers suppressed it as it might embarrass the Dukakis campaign.

I do not support such a policy, because it would help the USA at the expense of the rest of the world and I care about the rest of the world too. However, I think it works.

For example Larry^2 conclude that European subsidies to Airbus Industrie made Europe richer (partly by capturing part of the high profits of a not very competetive sector, partly by makin airliners cheaper and they imported all of theres ex ante and partly because workers got higher wages than they would otherwise get).

This is just one of many many cases in which economists disagree with non-economists who say things which make no sense given standard economic models. Then the models are modified to make them more realistic and the guy in the street's view becomes new economic theory not nonsense.

The especially interesting part is that, when economists talk to policy makers or the general public, they present the old economic models and ignore the fact that their implications are no longer the implications of economic theory as such but only of economic theory aged at least 22 years now.

In this case, I don't want to help US workers at the expense of foreign workers, so I don't care about the result. But I am absolutely convinced. Also it is exactly what non-economists have been saying all along (Dukakis for example said good jobs at good wages).

Since I am running on, I might mention the door of Larry Summers's office at the NBER (where he was never found during the Dukakis campaign). There was the Bloom county cartoon where a candidate (Bill the cat) was asked if he still thought the rich should be ground up into hamburger and fed to the poor. Bill argued that he said that when he was young and stupid 2 weeks before and what he meant was "Good Jobs at Good wages."

# posted by  Robert : 7:06 PM

 

Response to comment below. I think a country can benefit by protecting high wage industries. The basis for this view is a paper by Larry Katz and Larry Summers not entitled "Do interindustry wage differentials justify strategic trade policy." That was the running title but Summers suppressed it as it might embarrass the Dukakis campaign.

I do not support such a policy, because it would help the USA at the expense of the rest of the world and I care about the rest of the world too. However, I think it works.

For example Larry^2 conclude that European subsidies to Airbus Industrie made Europe richer (partly by capturing part of the high profits of a not very competetive sector, partly by makin airliners cheaper and they imported all of theres ex ante and partly because workers got higher wages than they would otherwise get).

This is just one of many many cases in which economists disagree with non-economists who say things which make no sense given standard economic models. Then the models are modified to make them more realistic and the guy in the street's view becomes new economic theory not nonsense.

The especially interesting part is that, when economists talk to policy makers or the general public, they present the old economic models and ignore the fact that their implications are no longer the implications of economic theory as such but only of economic theory aged at least 22 years now.

In this case, I don't want to help US workers at the expense of foreign workers, so I don't care about the result. But I am absolutely convinced. Also it is exactly what non-economists have been saying all along (Dukakis for example said good jobs at good wages).

Since I am running on, I might mention the door of Larry Summers's office at the NBER (where he was never found during the Dukakis campaign). There was the Bloom county cartoon where a candidate (Bill the cat) was asked if he still thought the rich should be ground up into hamburger and fed to the poor. Bill argued that he said that when he was young and stupid 2 weeks before and what he meant was "Good Jobs at Good wages."

# posted by  Robert : 7:08 PM

 

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