Public Policy and Governance – Page 117

Watch This Experiment!

Germany has begun an intriguing experiment. For a period of three years, a group of people will get €1,200 a month. (At today’s exchange rate, that’s $1,420.) The money is free; the only requirement is that recipients answer researchers’ questions about what they’re doing with this unconditional income.

As German media has reported,

Officials from the Mein Grundeinkommen (My Basic Income) charity are convinced that an unconditional income for all citizens would solve many current problems. The assumption is that people get more creative and become freer and happier if they don’t constantly face the pressure to earn enough money to get by.

Whether this lives up to reality will be explored scientifically during the project. “We’ll analyze what people are doing during a period of guaranteed material security,” project chief Jürgen Schupp from the German Institute for Economic Research (DIW) told DW.

Among the questions he’ll look into are: Will the test persons spend all the money or will they save a certain amount? Will they stop working altogether or work less? Also, will they donate money to others?

The experiment will give his team all the answers it needs, says Schupp. Even changes in people’s stress levels can be identified with the help of hair samples, he argues.

During the primaries, Andrew Yang brought the issue into more prominence, but the debate about UBI–an unconditional basic income– has been going on for years. The debate centers on dramatically different predictions of what people will do when they don’t have to do anything. Will receipt of a basic income make people lazy, make them less apt to work, less productive? Or is a UBI a tool to rationalize current social welfare systems (and not-so-incidentally, prepare for an era when automation has eliminated millions of jobs)?

I have been intrigued by what I see as the promise of a UBI.

What if the United States embraced a new social contract, beginning with the premise that all citizens are valued members of the American polity, and that (as the advertisement says) membership has its privileges? Contracts are by definition mutual undertakings, agreements in which both sides offer consideration. In my imagined “Brave New World,” government would create an environment within which humans could flourish, an environment within which members of the polity would be guaranteed a basic livelihood, a substantive education and an equal place at the civic table. In return, members (aka citizens) would pay their “dues:” taxes, a stint of public/civic service, and the consistent discharge of civic duties like voting and jury service.

With a UBI (in contrast to welfare) there would be no phase-out, no marriage penalties, no people falsifying information, no daunting (and expensive) bureaucracy.

Support for the concept hasn’t been limited to liberals and progressives. Milton Friedman famously proposed a “negative income tax,” and F.A. Hayek, the libertarian economist, wrote “There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend.” In 2016, Samuel Hammond of the libertarian Niskanen Center, noted the “ideal” key features of a UBI: its unconditional structure avoids creating poverty traps; it sets a minimum income floor, raising worker bargaining power without wage or price controls; it decouples benefits from a particular workplace or jurisdiction; since it’s cash, it respects a diversity of needs and values; and it simplifies and streamlines a complex web of bureaucracy, eliminating rent seeking and other sources of inefficiency.

Hammond’s point about worker bargaining power is especially important. In today’s economy, characterized by dramatically-diminished unions and the growth of “gig work,” employee bargaining power has dramatically eroded. Wages have been effectively stagnant for years, despite significant growth in productivity. In 2018, Pew Research reported that “today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago.

If the U.S. had a UBI and single-payer health insurance, workers would have the freedom to leave abusive employers, unsafe work conditions, and uncompetitive pay scales. A UBI wouldn’t level the playing field, but it would certainly reduce the tilt. It’s also worth noting that a UBI would have much the same positive effect on economic growth as a higher minimum wage. When poor people get money, they spend it, increasing demand.

Previous experiments and pilot projects have been encouraging; receipt of a guaranteed basic income has not caused people to stop working, and the money hasn’t been used for liquor and sin. Germany’s experiment looks to be larger than the others that have been reported, and it will be interesting to see its results.

Comments

Pandemics And Parking Meters

Back in 2011, Indianapolis (under then-Mayor Ballard) entered into a fifty-year agreement with a consortium called Park Indy to upgrade and manage the city’s parking meters. At the time, I was among those who argued strenuously against that agreement.

I had two major objections and two never-answered questions.

The first objection was to the fifty-year length of the contract. Even if the deal had been less one-sided fiscally, decisions about where to place meters, how to price them, what lengths of time to allow and so on have an enormous impact on local businesses and residential neighborhoods. As I said at the time, these are decisions requiring flexibility in the face of changing circumstances; they are most definitely not decisions that should be held hostage to contracting provisions aimed at protecting a vendor’s profits.

My second objection was that, under the terms of the contract, downtown developments and civic events would become more costly. More often than not, new construction interrupts adjacent parking. If the city is managing its own meters, it can choose to ignore that loss of parking revenue, or decide to charge the developer, based upon the City’s best interests. Street festivals and other civic celebrations also require that meters be bagged, and usually there are good reasons not to charge the not-for-profit or civic organization running the event. The ParkIndy contract required the City to pay ACS whenever interruptions require bagging the meters and disrupting projected revenues from those meters.

No one could have foreseen a pandemic, of course. That’s the point. When you contract away your flexibility, your authority to make decisions that are responsive to unforeseen events, you end up owing a lot of money to the private vendor. Indianapolis closed certain streets to traffic, in order to allow restaurants to serve customers outdoors, a move that probably kept some of them afloat during a very difficult time. That required bagging the meters on those streets. WISH reports that the city has already had to pay Park Indy 450,000 under the contract–at a time when the pandemic is wreaking havoc with city and state finances.

File that payment under “adding insult to injury,” since, according to periodic reports, the city has never come close to receiving the income it projected when this ill-conceived privatization agreement was negotiated. In May of 2016, the Indianapolis Star reported that the city was reaping only about a quarter of the dollars ParkIndy projected when it paid $20 million for the right to operate the meters until 2061.

Then there are my two questions.

As I wrote at the time, why privatize at all? Parking isn’t rocket science. There was never a satisfactory response to the obvious question “why can’t we do this ourselves, and keep all the money?” Why couldn’t Indianapolis retain control of its infrastructure, and issue revenue bonds to cover the costs of the necessary improvements? Interest rates were at a historic low at the time, making it even more advantageous to do so. If the Ballard administration was too inept to manage parking, it could have created a Municipal Parking Authority, as Councilor Jackie Nytes suggested at the time.

What was the compelling reason to enrich private contractors and reduce (desperately needed) City revenues.

And finally, why ACS –the company that is the primary partner of ParkIndy. There had already been extensive publicity about ACS’ performance problems in Chicago; there was also troubling information about the company’s track record in Washington, D.C., where an audit documented mismanagement, overcharging, over-counting of meters, and the issuance of bogus tickets (ACS got all the revenue for tickets). The audit found that Washington had lost $8,823,447 in revenue and experienced a twenty-fold increase in complaints from the public.

The only answer I could come up with was that the Ballard Administration got an up-front infusion of cash which helped it hold the line on taxes while Ballard was in office–and who cares about the future?

This was actually something of a modus operandi for Ballard. An academic paper I co-authored with a colleague shared the results of our investigation into the convoluted structure of the city’s sale of its water and sewer utilities. The highly sophisticated financing scheme for the sale had the effect of shifting costs to utility rate-payers that should properly have been assumed by taxpayers.

There’s a saying among politicians: to elected officials, “long-term” means “until the next election.”

And I used to think that “fiscally responsible” meant “pay as you go.” I was so naive…

Comments

Fear Itself

Paul Krugman’s column on August 24th really, really hit the proverbial nail on the head. It was titled “QAnon is Trump’s Last, Best Chance,” and it homed in on the nature of the snake oil that Trump and the GOP are peddling.

Last week’s Democratic National Convention was mainly about decency — about portraying Joe Biden and his party as good people who will do their best to heal a nation afflicted by a pandemic and a depression. There were plenty of dire warnings about the threat of Trumpism; there was frank acknowledgment of the toll taken by disease and unemployment; but on the whole the message was surprisingly upbeat.

This week’s Republican National Convention, by contrast, however positive its official theme, is going to be QAnon all the way.

I don’t mean that there will be featured speeches claiming that Donald Trump is protecting us from an imaginary cabal of liberal pedophiles, although anything is possible. But it’s safe to predict that the next few days will be filled with QAnon-type warnings about terrible events that aren’t actually happening and evil conspiracies that don’t actually exist.

Think about that last line: terrible events that aren’t actually happening and evil conspiracies that don’t actually exist. Inculcating fear–of Black people, Jews, immigrants, socialists–has been a Republican staple since Nixon’s “Southern Strategy,” but until recently, it was only a portion of that strategy.

Now, the once-Grand-old-Party has nothing else.

As Krugman points out, the messaging employed by this administration has focused on efforts to panic Americans over nonexistent threats.

If you get your information from administration officials or Fox News, you probably believe that millions of undocumented immigrants cast fraudulent votes, even though actual voter fraud hardly ever happens; that Black Lives Matter protests, which with some exceptions have been remarkably nonviolent, have turned major cities into smoking ruins; and more.

It has been a constant barrage of Kellyanne Conway’s “alternative facts.”

Krugman says that much of this focus on imaginary threats is a defense mechanism from people who have no clue how to do policy, or to cope with real threats.

Covid-19, of course, has been the. all-too-visible example of that inability. In the face of massive American deaths, Trump has offered quack remedies (drink bleach!), and little else other than blaming China. and denying the severity and extent of the pandemic.

Trump, in other words, can’t devise policies that respond to the nation’s actual needs, nor is he willing to listen to those who can. He won’t even try. And at some level both he and those around him seem aware of his basic inadequacy for the job of being president.

What he and they can do, however, is conjure up imaginary threats that play into his supporters’ prejudices, coupled with conspiracy theories that resonate with their fear and envy of know-it-all “elites.” QAnon is only the most ludicrous example of this genre, all of which portrays Trump as the hero defending us from invisible evil.

If all of this sounds crazy, that’s because it is. And it’s almost certainly not a political tactic that can win over a majority of American voters.

Trump’s base is terrified. They are afraid most of all of demographic change, of losing their white, Christian, masculine privilege, but they are also deeply uncomfortable with the increasing ambiguities of modern life. They want desperately to “return” to a world that never was.

Real-world policies–the kind that would appear in a party platform, or be embraced by competent grownups–can’t soothe those fears. The Republican Party has retreated to the only thing it has left: fantasy.

So they are ramping up the fear and telling us “those people” are to blame.

Comments

When Voters Can’t Connect The Dots…

Thousands–probably, millions–of words have been written about Republicans’ religious devotion to anti-tax beliefs. Unfortunately, that dogma is matched by a pervasive lack of understanding of how tax dollars are spent, and what citizens get for our money.

There are plenty of. wasteful programs, of course, not to mention subsidies that have long outlived whatever merit they may once have had. These wasteful and unnecessary programs allow politicians to make the case that all taxes are theft. It then follows that any and all efforts to reduce taxes are by definition laudatory.

Which brings us to Donald Trump’s recent plan to end or defer the payroll tax.

As a number of media sources have explained, payroll taxes support Social Security and Disability Insurance. Social Security’s Chief Actuary, Stephen C. Goss, evaluated the Trump proposal; he concluded that it would end Disability Insurance in mid-2021 and destroy Social Security by mid-2023.

When those of us who are fortunate enough to still be employed look at our pay stubs, we see hefty deductions for FICA. Most of us have undoubtedly thought about how nice it would be to have those dollars right now. Reasonably informed adults, however, who realize that they will need Social Security at some point, understand that deferring instant gratification is in their long-term best interests. (It’s true that some small portion of the population would be able to invest on their own behalf, but since most people couldn’t or wouldn’t, massive poverty among the elderly would result.)

Those who don’t know what the payroll tax deduction pays for see it as just another tax to attack.

I understand that tax policy can be complicated. When I pontificate about Americans’ lack of civic literacy, I’m not suggesting that we all need to know the ins-and-outs of the various ways government assesses us to pay for services–but it would be helpful if people recognized that we need to pay for services that are widely popular and obviously needed at the local, state and federal levels.

Actually, it would be more than helpful if Americans could agree on the essential components of both our physical and social infrastructure. At the local level, there’s a public outcry if streets, roads and bridges aren’t properly maintained. Whatever our concerns about policing, a vast majority expect local government to provide for public safety. Most of us think cities should provide public transit, garbage and snow removal, and a variety of other services.

Survey research leaves no doubt about the popularity of federal social welfare programs like Social Security and Medicare. Survey research also tells us that far too many Americans fail to connect the dots between the taxes they pay and the services they demand.

Should thoughtful and competent individuals and organizations monitor government. programs to ensure that our tax dollars are being wisely and appropriately spent? Absolutely. Are there programs that should be eliminated? You betcha! But ensuring the efficiency of public administration is a far cry from across-the-board anti-tax dogma–and a very far cry from uninformed and dangerous efforts to keep today’s dollars by selling the future short.

As usual, Trump and his administration are counting on the ignorance of his supporters. And to be fair, eliminating the payroll tax is (marginally) less dangerous than drinking bleach…

Comments

American Exceptionalism?

When we hear the term “exceptional,” we tend to think in terms of merit–someone who is exceptionally good at something. But exceptional has another meaning: unusual. As in “not typical” or “abnormal.” Even before the disaster of the past four years, I’ve come to see American exceptionalism as more of an illustration of that less desirable definition than the former. Our current struggle with COVID-19 has certainly undercut the widespread belief that Americans are exceptionally competent.

My cardiologist cousin recently shared an article from the Journal of the American Medical Association (JAMA) that focused on the prevalence of biases that have inhibited our national response to the pandemic–biases that, when added to the utter lack of competent national leadership, certainly help to explain our inability to contain it.

The article began with a discussion of ventilators. One of the first decisions made by the Trump administration in response to the pandemic was to spend $3 billion dollars to build more ventilators. As the article noted, however,

These extra ventilators, even had they been needed, would likely have done little to improve population survival because of the high mortality among patients with COVID-19 who require mechanical ventilation, which acts to divert care-givers away from more health-promoting endeavors. Yet most US residents supported this response because they believed that enough ventilators would lead to better overall survival from this scourge.

So why are so many people supportive of ensuring a sufficient number of ventilators but not similarly supportive of efforts to implement earlier, more aggressive physical distancing, testing, and contact tracing– policies that would have saved far more lives? The article attributes that (illogical) response to the referenced biases, beginning with our human tendency to “prioritize the readily imaginable over the statistical, the present over the future, and the direct over the indirect.”

In other words, to prioritize emotion over science.

This causes humans to respond more aggressively to threats to identifiable lives, ie, those that an individual can easily imagine being their own (or representing of people they care about such as family members) than to the hidden, “statistical” deaths reported in accounts of the population-level tolls of the crisis. Similarly, psychologists have described efforts to rescue visible, endangered individual lives as a highest priority goal, even if more lives would be saved through alternative responses.

Anyone who has ever wrestled with the Trolley Problem has encountered that bias.

This very human trait is why descriptions of the millions of people killed by the Nazis and the Soviets, or reports of the Rwandan and Chinese genocides–or our own near eradication of Native Americans– are less moving, less likely to cause outrage, than the individual stories that emerge from those and other horrific episodes in human history.

The article also cites “Optimism Bias,” our human tendency to predict optimistic outcomes.

Although early pandemic prediction models considered both best and worst-case outcomes, sound policy would have attempted to minimize mortality by doing everything possible to prevent the worst case results, but human optimism bias led many to act as if the best case was in fact the most likely. President Trump provides one of many good examples of this bias.

There were others: A preference for benefits in the “here and now” to larger benefits in the future, leading us to place greater value on saving a life today than a life tomorrow, and something called Omission Bias–a desire to avoid an imminent “harm” (like the pain of a vaccination) even when avoiding it is likely to lead to significantly worse results down the road.

It’s one thing to recognize the prevalence of these very human biases. It’s another thing, however, to indulge them–and it is unforgivable to cater to them through public policies rather than basing those policies on medical and scientific knowledge.

If we really want to achieve that first definition of American “exceptionalism,” we will stop denigrating and dismissing scientific and other expertise, stop scorning people who know what they’re doing as “elitists,” and stop electing people. who pander to our biases rather than those willing to base policy decisions on the best information available.

Comments