Public Policy and Governance – Page 247

Beyond the Bumper Stickers

“It’s more complicated than that” is a sentence I probably mutter in my sleep. (My students think I repeat it on a daily basis, sort of like a mantra.)

In a New York Times op-ed a couple of weeks ago, Miriam Sapiro, who was a deputy U.S. trade representative from 2009 to 2014, addressed one of the many subjects that is more complicated than either free-trade purists or knee-jerk opponents of markets understand, in “What Trump and Sanders Get Wrong About Free Trade.”

After noting that the United States enjoys a 200 billion dollar trade surplus, she points out that unless we continue working to pry open foreign markets for American goods and services, we will have a hard time creating more jobs: Nearly all of the world’s population lives outside our borders.

The Department of Commerce estimates that every increase of $1 billion in exports sustains nearly 6,000 jobs, and that export-related jobs pay on average 18 percent more than jobs focused on the domestic market.

We Americans have an unfortunate tendency toward “either/or” arguments. Trade is good or bad. We are for it or against it. But this is one of those areas in which the question is not–or should not be–yes or no, but how. What distinguishes a good trade agreement from a bad one? How do we ensure an equal playing field? If domestic manufacturers have to abide by rules protecting the environment and ensuring fair labor practices, for example, other parties to these agreements should be bound by similar constraints. All trade agreements are not equal.

And we need to recognize that there are multiple causes of our economic problems.

Rather than blaming international trade for economic woes, we need to have an honest conversation about what the United States must do to strengthen its economy. More than 20 percent of American children today live in poverty. Our educational system, once the envy of the world, now ranks in the bottom half of much of the developed world. The tax system rewards companies that exploit loopholes, infrastructure is crumbling and training programs lack the kind of apprenticeship and credentialing opportunities that Germany and other major economies offer…
Of course it is easier to score points by denouncing trade than to tackle the tough issues, but such demagogy ignores the roots of economic insecurity and inequality.

It’s handy to have a villain to identify, but the emotional satisfaction of identifying someone or some thing as the “bad guy” rarely translates into a solution to the problem at hand.

It is also a mistake to think that positions on trade policy break down along neat party lines. As we learn from Political Animal,

U.S. Conference of Mayors (which is overwhelmingly Democratic), endorsed TPP. The reason, as Ron Brownstein pointed out, is clear.

New data released May 13 by the Brookings Institution’s Metropolitan Policy Program helps explain the mayors’ tilt toward trade…Brookings found that fully 86 percent of U.S. exports now originate from urban areas. Moreover, exports drove more than one-quarter of all metro area economic growth from 2009-2014.

I think it was H.L. Mencken who said “For every complex problem there is an answer that is clear, simple, and wrong.”

Comments

Squirrel!

Is it just me, or does the recent rash of anti-LGBT measures remind other people of Finding Nemo?

If memory serves (and at my age, it may not) the “Dory” character would be pursuing a goal when suddenly she would be distracted by something unrelated and unimportant. Her head would swivel, and shouting “squirrel,” she’d forget what she’d been doing and follow the distraction instead.

Sort of like Mississippi, one of the most recent states to enact homophobic legislation.

According to a story in USA Today, Mississippi’s “well-being” scores are abysmal:

Mississippi
> Well-being index score: 63.7
> Life expectancy: 75.0 years (the lowest)
> Percent obese: 35.4% (the highest)
> Median household income: $37,095 (the lowest)
> Percent with high school diploma: 82.3% (3rd lowest)

Nowhere else in the U.S. did people feel as negative about their work environment as in Mississippi. But this was just one of the problems facing state residents. Respondents were among the most likely in the nation to lack access to basic necessities. More than a quarter of people surveyed in the state indicated they did not have money for food at some point in the previous 12 months, while nearly as many lacked money for health care. By a number of measures, the state was one of the absolute poorest in the nation. The median income in Mississippi was just $37,095 in 2012, lowest in the U.S. Also, 24.2% of people lived below the poverty line, more than in any other state. With limited access to basic needs and poor healthy behaviors, the state was among the worst in the nation in physical health assessments. Last year, no state had a higher obesity rate than Mississippi. In 2010, no state had a higher rate of death from heart disease or a lower life expectancy at birth than Mississippi.

So–rather than keeping their eye on the task at hand–which should be ameliorating these appalling negatives–Mississippi’s lawmakers chose to yell “squirrel!” and point to the (nonexistent) menace posed by that state’s gay and transgender citizens.

This actually seems to be a favored tactic in several states, including Mike Pence’s Indiana. (Not very good at governing? Quick–pick a distraction!)

As someone recently noted, the current bathroom hysteria is particularly misdirected, since there is no record of any transgender misbehavior in a public restroom–something you certainly can’t say about Republican lawmakers’ public restroom activities.

In fact, the more we learn about the private conduct of our most homophobic “family values” office-holders, the more interesting it gets: Dennis Hastert (recently convicted of abusing young boys when he was a coach) led the fight against same-sex marriage–not to mention the effort to impeach Bill Clinton for his sexual improprieties. In Alabama, Robert Bentley, another “pious” GOP Governor of a backward state who supports “religious liberty” legislation, is embroiled in a tawdry sex scandal. And so it goes.

What do you do when you’re caught with your pants down–either literally or figuratively?

Squirrel!!

Comments

Fascinating!

On the original Star Trek series, when Mr. Spock was confronted with a new and unexpected bit of information, he would raise one Vulcan eyebrow and intone “fascinating.”

I don’t have a Vulcan eyebrow, but “fascinating” was my reaction to a 2013 academic paper written by Johannas Haushofer and Jeremy Shapiro, with the not-very-sexy title “Household Response to Income Changes: Evidence from an Unconditional Cash Transfer Program in Kenya.”

Stop yawning, because this is important. And fascinating.

In the U.S., lawmakers (and not just right-wing ones) have long taken a punitive approach to the poor. Even self-labeled “compassionate conservatives” like former President George W. Bush have proposed programs that would “help welfare recipients develop middle-class values.” (Because clearly, if you are poor, you must be morally defective.) American attitudes toward the needy have their roots in 15^th Century English Poor Laws that prohibited “giving alms to the sturdy beggar.”

American social welfare programs built on that model have numerous, demeaning—and costly—restrictions on eligibility. After all, if “we” don’t watch “them,” they’ll cheat us hardworking taxpayers.

Most recently, a number of state legislators have piled on; convinced that any assistance allowing recipient discretion would “obviously’ lead to imprudent choices, they have even passed rules about what welfare recipients can buy at the grocery store with their food stamps.

Imagine what would happen if we simply sent poor people some cash! (Um…perhaps like Social Security…?)

Well, it turns out we don’t have to imagine it; an NGO called “GiveDirectly” has been doing just that in Kenya. GiveDirectly chooses beneficiaries at random; the only criteria is income below poverty level. The organization is rigorously evidence-based, and the paper I came across is one of several independent research projects examining the results.

So what happened?

Recipients spent more on health and education. Alcohol and tobacco expenditures did not increase. The researchers found

no evidence for an increase in tension within households, no significant spillover effects on non-recipient households, and no general equilibrium effects at the village level, with the single exception that we observe an increase in female empowerment at the village level. Together, these findings suggest that simple cash transfers may not have the perverse effects that some policymakers feel they would have, which has led for a clear policy preference for conditional cash transfers or in-kind transfers.

I came across this article because I have recently become aware of psychological studies connecting poverty with a host of deleterious psychological consequences, and I was exploring the literature reporting on those consequences for a book I’m writing. (I had previously understood the link between insecurities of various kinds and social unrest, but I was unaware of this particular line of research.)

As an article in New America Weekly reported, the human brain has specific reactions to any form of scarcity; it seems that cognitive capacity can only be stretched so far. This has been dubbed the “bandwidth tax,” shorthand for the proposition that scarcity inhibits the brain’s ability to focus on multiple tasks. This isn’t a big surprise to anyone who has agonized over whether to use her limited funds to buy baby formula or see the pediatrician.

Interestingly, the levels of stress associated with poverty can be assessed physically; people produce a “stress hormone” called cortisol, levels of which can be measured.

Haushofer and Shapiro measured them.

Transfer recipients experience large increases in psychological well-being, and several types of transfers lead to reductions in levels of the stress hormone cortisol.

Apparently, cash transfers to desperately poor people are followed by increased access to education and medical care, and lowered levels of a stress hormone that interferes with good decision-making.

Fascinating.

Comments

Paying for Secrecy

Indiana doesn’t have money for adequate infrastructure repair and maintenance, or for preschool for at-risk children, or …well, you know the drill. There are all sorts of things normal citizens expect their state government to do only to be told by our elected overlords that the money isn’t there.

But there’s always enough money to pay the lawyers to defend our lawmakers’ misplaced priorities or ethically indefensible actions.

Did Indiana’s Governor refuse to resettle Syrian refugees, despite the fact that under long-settled law, he doesn’t have the legal authority to make that decision? Let’s have the Attorney General defend him in the inevitable lawsuit, and then appeal the (equally inevitable) adverse verdict.

Is the Environmental Protection Agency trying to bring 19th Century environmental policies into compliance with the realities of 21st Century problems? Sue the EPA and insist that Indiana won’t go along.

And don’t get me started on the entirely voluntary participation of Indiana in several culture war lawsuits aimed at derailing equal rights for LGBT Americans. We do like to keep our AG busy!

Most recently, we learn from the Fort Wayne Journal Gazette (not from the Indianapolis Star, which is too busy reporting on the “beer beat” and obsessing over the broom guy to cover city or state government) that

Hoosier taxpayers have paid $160,000 in legal fees to shield Indiana House and Senate communications from public view in just eight months.

The final tab will be higher because the most recent tally from the Indiana Auditor’s Office doesn’t include a bill covering the March 17 oral argument before the Indiana Supreme Court.

“That’s a lot of money,” said Kerwin Olson, executive director of the Citizens Action Coalition. “It would have been a lot cheaper just to honor the public records law.”

“Follow the money” is a time-honored mantra that can mean many things. But one thing it almost always means is that people allocate resources based upon their actual priorities.

Indiana may not “have money” for preschool, or road repair, or environmental protection, but we seem to have unlimited resources to protect the perquisites of the powerful…

Comments

Eliminating Welfare

When I first became interested in economic policy, I found Milton Friedman’s advocacy of a “negative income tax” appealing. As I recall (and I read about it a long time ago), the idea was that people making more than a set amount–presumably, an amount sufficient to live on–would pay taxes, and those making less would receive a supplement bringing them up to sufficiency.

One virtue of such an approach would be to cut out the costs of the significant bureaucracy devoted to administering complicated systems of public assistance.

As I say, I read this a long time ago, and my recollection of the details is hazy at best. What brought it to mind was reading about a proposal currently under review in New Zealand.

New Zealand’s Labour Party is considering the concept of a basic “citizen’s wage.” Andrew Little, leader of the Labour Party, confirmed this as the result of the potential for higher unemployment in in the coming months and years. “Citizen’s income” is also known as Universal Basic Income (UBI). The idea is that everyone gets a basic amount of money to live off of, like a wage, and benefit systems are gotten rid of.

Switzerland and Finland have introduced similar systems.

I haven’t seen studies comparing the costs of such systems to the patchwork, cumbersome and demeaning welfare programs we currently administer, but I suspect a citizen’s wage would save considerable tax dollars.

Of course, I’m sure the very idea would raise howls of protest from the self-righteous legislators who want to punish people for being poor, and who seem to enjoy telling welfare recipients what they can buy at the grocery…

Comments