I started sharing politically-themed coronavirus humor back in March and that’s now been a tradition for nine consecutive weekends (see here, here, here, here, here, here, here, here, and here).
This will be the final edition.
We’ll start with a clever video from Kevin James. It could be entitled, Revenge of the Karens.
The clever folks at Babylon Bee have a story about disappointed governors.
Democrat governors across the nation have urged states to continue their lockdowns, saying if they end prematurely, their time in the limelight will be over. …said California Governor Gavin Newsom. “I can’t let this $500 hair cut go to waste. I spend thousands on hair gel alone every month. If I can’t give a press conference every night, it’s all for nothing!” Governor Andrew Cuomo of New York agreed. “We must continue this crisis as long as possible so that people will know who I am,”… A study confirmed the governors’ worst fears, showing that in states with no COVID-19 restrictions, people don’t think about the government much at all and just go about their daily lives. “We can’t let that happen,” said Michigan Governor Gretchen Whitmer.
The people who think that Bill and Hillary Clinton somehow had Jeffrey Epstein killed will like this bit of satire.
For what it’s worth, I always remind conspiracy-minded people that routine government incompetence is usually a better explanation for why things happen.
Next, we have a reminder that the climate alarmists must be very disappointed and jealous that they’ve been displaced by a crisis that actually does kill people.
I wrote recently about Florida’s economic success. Now, let’s look at another story from Babylon Bee, this one about how the Sunshine State is in trouble for its reaction to the virus.
Science says Florida should have seen skyrocketing deaths from COVID-19, but instead Florida — despite its large elderly population — has not seen anywhere near the number of problems faced by states like New York and New Jersey. This has been ruled to be in complete defiance of Science. …Washington Post columnist Jennifer Rubin… “Florida is undermining our trust in Science by not dying. We cannot tolerate this. More Floridians need to die. To die for Science.” California Governor and Science believer Gavin Newsom agreed. “Ron DeSantis is a witch! Burn him!” …There is now a movement by Science-believing Democrats to actively try to infect Floridians to try to get their death count to match projections.
As usual, I’ve saved my favorite for the end.
I’ve acknowledged that there’s much we don’t know about the virus and how to react. But I feel very confident in stating that the most bone-headed decision by politicians has been to endanger ordinary people by releasing criminals while at the same time arresting ordinary people and exposing them to the supposedly coronavirus-spreading justice system.
Which is the message of this Chip Box cartoon.
If you find this cartoon amusing, I highlighted my favorite Bok creations as part of a contest to identify the best political cartoonist.
P.S. I wish some of the ways that politicians have reacted to the virus – such as this, this, this, and this – were satire rather than reality.
I sometimes wonder why libertarians aren’t more persuasive given that there’s so much evidence for our economic and social views.
The answer may have something to do with matters such as psychology. Let’s take a closer look at this issue, starting with a video from Johan Norberg.
Johan’s point is that the real gap is between classical liberals (i.e., libertarians) and statists.
Though most of the research and analysis is based on potential differences between conservatives and liberals, as conventionally defined.
For instance, in a column for the U.K.-based Guardian, Arlie Hochschild writes about differences in awareness on the right and left.
…what’s startling is the further finding that higher education does not improve a person’s perceptions – and sometimes even hurts it. In their survey answers, highly educated Republicans were no more accurate in their ideas about Democratic opinion than poorly educated Republicans. For Democrats, the education effect was even worse: the more educated a Democrat is, according to the study, the less he or she understands the Republican worldview. “This effect,” the report says, “is so strong that Democrats without a high school diploma are three times more accurate than those with a postgraduate degree.” …Even more than their Republican counterparts, highly educated Democrats tend to live in exclusively Democratic enclaves. The more they report “almost all my friends hold the same political views”, the worse their guesses on what Republicans think. …Although in principle more tolerant of political diversity, highly educated – and mostly urban – Democrats live, ironically, with less of it.
And here’s a tweet about educated folks on the left being more likely to live in a bubble.
Regarding the issue of how different ideologies respond to external threats (supposedly a major driver of philosophical differences), Ross Douthat analyzed how conservatives responded to coronavirus in a column for the New York Times.
…an influential body of literature has attempted to psychologize the partisan divide — to identify conservative and liberal personality types, right-wing or left-wing minds or brains… In its crudest form this literature just amounts to liberal self-congratulation, with survey questions and regression analyses deployed to “prove” with “science” that liberals are broad-minded freethinkers and conservatives are cramped authoritarians. But…Haidt argues that conservatives actually have more diverse moral intuitions than liberals, encompassing categories like purity and loyalty as well as care and fairness, and that the right-wing mind therefore sometimes understands the left-wing mind better than vice versa. …the political responses to the pandemic have put these psychological theories to a very interesting test.
He then applies this analysis to the coronavirus.
If there was ever a crisis tailored to the conservative mind-set, surely it would be this one, with the main peril being that conservatives would wildly overreact to such a trigger. …As the disease spread and the debate went mainstream, liberal opinion mostly abandoned its anti-quarantine posture and swung toward a reasonable panic, while conservative opinion divided, with a large portion of the right following the lead of Trump himself, who spent crucial weeks trying to wish the crisis away. …figures like Rush Limbaugh and Sean Hannity manifested a conservatism of tribal denial, owning the libs by minimizing the coronavirus threat. …one might say that the pandemic illustrates the power of partisan mood affiliation over any kind of deeper ideological mind-set. Or relatedly, it illustrates the ways in which under the right circumstances, people can easily swing between different moral intuitions. (This holds for liberals as well as conservatives: A good liberal will be as deferential to authority as any conservative when the authority has the right academic degrees…) …what we call “American conservatism” is probably more ideologically and psychologically heterogeneous than the conservative mind-set that social scientists aspire to measure and pin down. In particular, it includes an incredibly powerful streak of what you might call folk libertarianism… This mentality, with its reflexive Ayn Randism and its Panglossian hyper-individualism, is definitely essential to understanding part of the American right. But…I’m doubtful that it corresponds to any universal set of psychological tendencies that we could reasonably call conservative.
By the way, a new study by four social scientists, published in Nature, casts doubt on the earlier research regarding ideological differences in threat perception
About a decade ago, a study documented that conservatives have stronger physiological responses to threatening stimuli than liberals. This work launched an approach aimed at uncovering the biological roots of ideology. Despite wide-ranging scientific and popular impact, independent laboratories have not replicated the study. We conducted a pre-registered direct replication (n = 202) and conceptual replications in the United States (n = 352) and the Netherlands (n = 81). Our analyses do not support the conclusions of the original study, nor do we find evidence for broader claims regarding the effect of disgust and the existence of a physiological trait.
And another study by three social scientists in the Personality and Social Psychology Bulletin also casts doubt on the earlier research.
One consistent finding is that conservatives show higher disgust sensitivity than liberals. This finding, however, is predominantly based on assessments of disgust to specific elicitors, which confound individuals’ sensitivity and propensity to the experience of disgust with the extent to which they find specific elicitors disgusting. Across five studies, we vary specific elicitors of disgust, showing that the relations between political orientation and disgust sensitivity depend on the specific set of elicitors used. We also show that disgust sensitivity is not associated with political orientation when measured with an elicitor-unspecific scale. Taken together, our findings suggest that the differences between conservatives and liberals in disgust sensitivity are context dependent rather than a stable personality difference.
So maybe there’s not a meaningful difference between right and left with regards to matters such as disgust and threats.
But there seems to be plenty of evidence that there are differences in other areas.
Depending on political affiliation, Americans shop differently, as reported by Suzanne Kapner and Dante Chinni in the Wall Street Journal.
Consumer research data show Democrats have become more likely to wear Levi’s than their Republican counterparts. The opposite is true with Wrangler, which is now far more popular with Republicans. There is no simple explanation behind those consumer moves. Some of it is due to social and political stances companies are taking, such as Levi’s embrace of gun control. …the country is becoming more polarized along political lines, which is having an effect on brands that choose to stay out of the political fray. …Nearly 60% of 1,000 Americans surveyed by Edelman last year said they would choose, switch, avoid or boycott a brand based on its stand on societal issues. That is up from 47% in 2017.
Some of this makes sense to me. I have dramatically reduced my purchases at Dick’s, for example, because of the company’s opposition to the 2nd Amendment.
Here’s a graphic from the story. The self-selection of Fox and CNN viewers is especially noteworthy.
Folks on the right and left may even sleep differently, according to research published in the Journal of Politics by Aleksander Ksiazkiewicz at the University of Illinois.
This article proposes that chronotype (a person’s time-of-sleep preference) is a previously unidentified psychological correlate of political ideology. Chronotype may lead to political ideology through a motivated social cognitive process, ideology may shape sleep patterns through a desire to align with social norms, or ideology and chronotype may arise from common antecedents, such as genetics, socialization, or community influences. Analyses demonstrate a link between a morningness and conservatism in seven American samples and one British sample. This relationship is robust to controls for openness, conscientiousness, and demographics, including age, sex, income, and education.
Last but not least, Justin Lehmiller of the Kinsey Institute, in a column for Politico, says Republicans and Democrats have different fantasies.
I surveyed 4,175adultAmericans from all 50 states about what turns them on…one of the more intriguing things I uncovered was the political divide in our fantasy worlds. While self-identified Republicans and self-identified Democrats reported fantasizing with the same average frequency—several times per week—I found that Republicans were more likely than Democrats to fantasize about a range of activities that involve sex outside of marriage. Think things like infidelity, orgies and partner swapping… By contrast, self-identified Democrats were more likely than Republicans to fantasize about almost the entire spectrum of BDSM activities, from bondage to spanking to dominance-submission play. The largest Democrat-Republican divide on the BDSM spectrum was in masochism, which involves deriving pleasure from the experience of pain. …What connects Republicans and Democrats, I believe, is that their fantasies are at least partly driven by what they can’t have. …Interestingly, the single most commonly fantasized-about politician among both parties was the same: Sarah Palin (though Republicans were much more likely to have Palin fantasies than Democrats). Following Palin, the next most frequently mentioned politicians in Republicans’ fantasies were John F. Kennedy, Bill Clinton and Nikki Haley. While, after Palin, Democrats fantasized about Barack Obama, Bill Clinton and Hillary Clinton.
Maybe I’m strange, but I’ve never met or seen an American politician that piqued my interest.
Speaking of quirky, folks on the left appear to have more issues with mental health.
Among white liberals under 30, nearly half have a mental health condition, compared to 21-26 % among centrists and conservatives. H/t @ZachG932https://t.co/iG9saHtvRR
Since I’ve asserted that folks on the left are “neurotic” and “guilt-ridden,” part of me agrees with these findings.
Though, to be fair, maybe they’re just more likely to visit healthcare providers.
I’ll conclude with what I will conveniently characterize as the most insightful research.
Three scholars, in an article for Current Psychology, find that libertarians are the smartest.
Previous studies consistently showed that analytic cognitive style (ACS) is negatively correlated with social conservatism, but there are mixed findings concerning its relation with economic conservatism. Most tests have relied on a unidimensional (liberal-conservative) operationalization of political orientation. Libertarians tend not only to identify themselves as conservative on this scale but also to score higher on ACS than liberals and conservatives.
Here’s the relevant chart from the study, courtesy of Rolf Degen.
Liberals can take some solace in that they score above conservatives, though there’s not much that can be said for self-identified moderates.
P.S. I started this column by noting that I want to understand how to be a more persuasive advocate for liberty. I don’t know if that will ever happen, but at least I can take comfort in that I will never be as deluded as this columnist who thinks he has discovered a way of becoming a more persuasive advocate for statism.
P.P.S. If you like this type of research, my previous columns on supposedly innate differences across ideologies can be found here, here, and here.
P.P.P.S. And here’s the research on the differences between libertarians and conservatives.
In the world of tax policy, big-picture issues such as tax reform can capture the public’s attention (should we junk the IRS, instance, and adopt a flat tax?).
Today, we’re going to discuss another one of the sleep-inducing tax issues – how to account for business losses.
This arcane issues has been attracting a bit of attention because the big coronavirus-driven emergency package included some changes to the tax treatment of such losses (making it easier to reduce overall tax liabilities by balancing losses in some years with profits in other years).
That upset two left-leaning members of Congress, Rep. Lloyd Doggett (D-TX) and Sen. Sheldon Whitehouse (D-RI), who editorialized in USA Today about the changes.
…tucked into its 880 pages were Republican-inserted tax provisions…that..allow certain investors…to cut their tax bills by shifting losses to prior tax years. …Large corporations were also authorized to convert losses from two years before the pandemic into immediate tax refunds. Businesses with losses when the economy was growing are rewarded for poor management or adverse market conditions that had absolutely nothing to do with the pandemic. …let’s reverse the damage. We are offering legislation to unwind this massive tax giveaway, to recover the lost revenues… Giant special interest tax breaks were not needed before and certainly have no place during a pandemic.
Is this right? Did a handful of GOP politicians insert a special favor for their friends in the business community?
For what it’s worth, I’m sure the answer to both questions is yes. Politicians are a very self-interested group and I’m sure there were dozens of provisions in the legislation that qualified for that type of criticism.
I’m interested, however, in whether the provisions moved policy in the right direction or the wrong direction.
Kyle Pomerleau with the American Enterprise Institute explains why the changes were desirable.
The liberalized treatment of losses is not a bailout and does not provide special treatment of certain industries. Loss deductions are an essential part of a well-functioning income tax. Businesses typically make multi-year investments. Those investments may lose money in some years make money in other years. The ability to either carry back losses to offset previous years’ taxes or carry forward losses to offset future taxes ensures that the tax system accurately measures income. Without loss deductions, a tax system would be biased against risky investment. …In the future, lawmakers should consider permanently liberalizing the treatment of losses.
The provision at hand, a loosening of net operating loss rules, isn’t cronyism. Instead, it reflects Congress’s priority of helping affected individuals and businesses weather our economic crisis by smoothing out “lumpy” tax burdens over time. Net operating losses (NOLs) are key features of the tax code. Tax years, calendar years, and business profitability don’t always align. Net operating loss provisions help smooth profits and losses across tax years to ensure that businesses are taxed on their economic income, not an accounting byproduct. …many have argued that it made little sense for Congress to revise loss rules for 2018 and 2019, when the virus wasn’t a consideration. In the abstract, that concern makes sense but policymakers were concerned about providing immediate liquidity to firms. A 2020 NOL doesn’t help a firm until they file their 2020 tax return in 2021. But allowing carrybacks for 2018 or 2019 allows firms to access capital quickly by amending their previous returns and claiming a refund.
I didn’t pretend to know whether Trump was doing the right thing or wrong thing with his tax returns, but I made the argument that a fair and neutral tax system should have carry-forward rules.
Indeed, the business side of the flat tax expressly includes such provisions.
For what it’s worth, households used to have the option for “income-averaging,” which basically meant they could lower their overall tax rate by spreading a spike in income over several years.
A difference between households and businesses, though, is that businesses can suffer losses, while the worst thing that happens to a household is when income drops to zero.
The bottom line is that income averaging for people would be a helpful provision in the tax code, but carry-forward rules for businesses are a necessary provision.
At the risk of stating the obvious, a simple and fair tax system is not the goal of most politicians. In public, they prefer using the tax code as a tool for class-war demagoguery, and in private, they use it as a vehicle for auctioning off special provisions to their cronies.
A new working paper from the European Central Bank gives us some insights on what will happen if they succeed.
Authored by Daniel Baksa, Zsuzsa Munkacsi, and Carolin Nerlich, the study look at the long-run impact of related policies in Europe, using Germany and Slovakia as examples.
Here’s their description of the study.
In view of the adverse macroeconomic and fiscal implications of ageing, many European countries have implemented significant pension reforms… More recently, however, the reform progress has stalled, and despite an unchanged demographic outlook, several European countries reversed, or plan to do so, parts of their previously adopted pension reforms. In this paper we offer a framework that allows us to evaluate the macroeconomic and fiscal costs of pension reform reversals. …By using a general equilibrium model with overlapping generations we can account for feedback effects between changes in pension parameters, pension expenditures and macroeconomic variables. …The model is calibrated for Germany and Slovakia.
Before sharing their findings, here’s a look at how demographics are a ticking time bomb for Europe.
The yellow dots are the 2016 numbers for the old-age dependency ratio (the number of people over 65 compared to the 15-64 working-age population) and the red dots show how that ratio will deteriorate by 2070 (the numbers for the United States are similarly grim).
These bad numbers mean that Europe’s economic outlook will worsen over time.
…population ageing has adverse macroeconomic and fiscal implications. …the results show an increase in the public debt-to-GDP ratio by around 100 percentage points until 2070, compared to the initial period, for both Germany and Slovakia. Moreover, real GDP per capita is projected to decline by almost 14% in Germany and 9% in Slovakia, compared to the initial period.
But it’s possible for the numbers to get better or worse, depending on changes to public policy.
…similar to other studies we find evidence that pension reforms help to contain the adverse implications of ageing… In particular, increases in the retirement age appear to help to alleviate ageing pressures most. …we find strong evidence for the presumption that reversals of pension reforms are potentially very costly. In fact, reform reversals would not only result in higher aggregate pension expenditure and public debt-to-GDP ratios, but would in most cases also exacerbate the adverse macroeconomic impact of ageing.
Unfortunately, public policy is now trending in the wrong direction. Here’s what’s been happening in Germany and Slovakia.
Germany recently decided to cap the decline in the benefit ratio and the increase in the contribution rate until 2025 at certain levels, and is considering whether to extend this cap even until 2040. Slovakia decided to break the automatic link between changes in life expectancy and retirement age, by capping the retirement age at 64 years. …in the reversal scenario for Germany we freeze the benefit ratio at its current level of 48% and assume that the contribution rate would not exceed the threshold of 20% until 2040. With this reform reversal scenario we assume that the agreed freeze of the benefits ratio and contribution rate until 2025 will be ex-tended until 2040. In Slovakia, we assume the retirement age to stop increasing from the year 2045 onwards.
And what do they find when countries backtrack on reform?
Here’s what they estimated in Germany.
For Germany, we find that the reform reversal would imply sizeable costs (see Table 6, column “reform reversal”). Specifically, by 2070, the increase in the public debt-to-GDP ratio can be expected to be ceteris paribus almost 60 percentage points higher than under the baseline scenario, as a result of higher pension expenditures, adverse feedback effects and lower contribution rates.
For those interested, here’s Table 6, which I’ve augmented by highlighting in red the most relevant changes. Yes, the debt increases compared to the baseline, but I think it’s equally important (if not more important) to see how young people are hurt and how the burden of government spending goes up.
Now let’s see what the authors found for Slovakia.
…we quantify the fiscal costs of the reform reversal in Slovakia by comparing the debt impact under the reform reversal scenario with that under the baseline scenario. Our results show that such a reform reversal would be very costly. In fact, the increase in the public debt-to-GDP ratio would be more than 50 percentage points higher than the estimated increase of around 100 percentage points of GDP under the baseline scenario (see Table 7).
Here’s Table 7, and again I have highlighted in red the increase in debt as well as the data showing additional harm to young people and a much bigger increase in the burden of government spending.
So what do these findings mean for the United States?
Let’s explain using a homemade infographic. I’ve put four options for Social Security on a spectrum. Here’s what they mean.
“Expand Social Security” means more taxes and spending in pay-as-you-go systems that are already costly and out of balance.
The “Status Quo” is a typical pay-as-you-go-system (where the United States is now and where Germany and Slovakia were before their reforms).
“Conventional Reform” means trying to stabilize a pay-as-you-go system by demanding that workers pay more while promising to give them less (what Germany and Slovakia did).
The most market-friendly position is “Personal Retirement Accounts,” which transforms creaky pay-as-you-go systems into real individual savings.
Here’s the infographic, including arrows to indicate that some options mean more government and others mean more prosperity.
What Germany and Slovakia did was move from “Status Quo” to “Conventional Reform.” But now they’re backtracking on those reforms and shifting back to the old version of the “Status Quo.”
In other words, a move in the direction of “More Government” and the European Central Bank’s study shows such a step will have negative consequences.
In the United States, by contrast, some folks on the left want America to move from “Status Quo” to “Expand Social Security.”
Like Germany and Slovakia, we’d be moving in the wrong direction. But the damage for the U.S. presumably would be worse because we didn’t first take a step in the right direction.
I wrote earlier this month about coronavirus becoming an excuse for more bad public policy.
American politicians certainly have been pushing all sorts of proposals for biggergovernment, showing that they have embraced the notion that you don’t want to let a “crisis go to waste.”
But nothing that’s happening in the United States is as monumentally misguided as the effort to create a new method of centralized redistribution in the European Union.
Kai Weiss of the Vienna-based Austrian Economic Center explains what is happening in a column for CapX.
…‘never let a good crisis go to waste’ seems to have become the mantra of both the European Commission a number of national leaders. The coronavirus has become a justification for…‘more Europe’ (which tends to actually mean more EU, to the detriment of Europe). The clearest sign of this renewed Euro-fervour is the plan cooked up by Angela Merkel and Emmanuel Macron earlier this week… Seasoned Brussels observers will be shocked to learn that their proposals have very little to do with the pandemic, and everything to do with deepening the centralisation of EU power and top-down policymaking. While Germany has traditionally…opposed the idea of eurobonds or similar debt collectivisation instruments, it is now advocating for precisely those policies. A €500 billion Recovery Fund… the initial plan is for the European Commission to raise the money on the financial markets. It would subsequently be paid back by the member states and through increased “own resources” – i.e., new taxes levied directly by Brussels… The good news is that none of these policy proposals are yet set in stone. There are some big legal questions, particularly on the Recovery Fund, and national parliaments would need to agree to this expansion of Brussels’ writ. Already countries like the Netherlands, Austria, Denmark, and Sweden have voiced criticism… But for all these obstacles, the direction of travel looks alarmingly clear. The consensus among the EU’s power brokers, as with pretty much any major world event, is that the answer is ‘more Europe’. ..For Macron Merkel and their allies, this is far too good a crisis to pass up.
A story in the New York Times has additional details, including a discussion of potential obstacles.
Ms. Merkel this week agreed to break with two longstanding taboos in German policy. Along with the French president, Emmanuel Macron, Ms. Merkel proposed a 500 billion euro fund… It would allow the transfer of funds from richer countries… And it would do so with money borrowed collectively by the European Union as a whole. …Whatever emerges from the European Commission will be followed by tough negotiations… Chancellor Sebastian Kurz of Austria has raised objections to the idea of grants rather than loans, saying that he has been in contact with the leaders of Sweden, the Netherlands and Denmark. “Our position remains unchanged,’’ he said. …opposition may also come from member states in Central and Eastern Europe. …Those countries are going to be reluctant…to see so much European aid — for which they will in the end have to help pay — skewed to southern countries that are richer than they are. …in northern countries, moves for collective debt to bail out poorer southern countries may feed far-right, anti-European populists like the Alternative for Germany or the Sweden Democrats. They are angry at the idea of subsidizing southerners who, they believe, work less hard and retire much earlier.
What’s depressing about this report is that it appears the battle will revolve around whether the €500 billion will be distributed as grants or loans.
The real fight should be whether there should be any expansion of intra-E.U. redistribution.
For what it’s worth, Germany used to oppose such ideas, especially if funded by borrowing. But Angela Merkel has decided to throw German taxpayers under the bus.
Let’s close with some analysis from Matthew Lynn of the Spectator.
Die-hard European Union federalists have plotted for it for years. …The Greeks and Italians have pleaded for it. And French presidents have made no end of grand speeches, full of references to solidarity and common visions, proposing it. The Germans have finally relented and agreed, at least in part, to share debt within the EU and the euro-zone, and bail-out the weaker members of the club. …The money will be borrowed, based on income from the EU’s future budgets, but it will in effect be guaranteed by the member states, based on the EU’s ‘capital key’. …the rescue plan is completely unfair on all the EU countries outside the euro-zone. …why should they pay for it? Poland…will still be expected to pay in five per cent (or 25bn euros (£22bn)) to bail-out of far richer Italy (Polish GDP per capital is $15,000 (£12,000) compared with $34,000 (£27,000) for Italy).
Pro-centralization politicians are claiming this fund is needed to deal with the consequences of the coronavirus, but that’s largely a smokescreen. It will take many months for this proposal to get up and running – assuming, of course, that Merkel and Macron succeed in bullying nations such as Austria and the Netherlands into submission.
By that time, even the worst-hit countries already will have absorbed temporary health-related costs.
The bottom line is that this initiative is really about the long-held desire by the left to turn the E.U. into a transfer union.
The immediate losers will be taxpayers in Germany, as well as those in Austria, Sweden, the Netherlands, Finland, and a few other nations.
But all of Europe will suffer in the long run because of an increase in the continent’s overall fiscal burden.
And keep in mind that this is just the camel’s nose under the tent. It’s just a matter of time before this supposedly limited step becomes a template for further expansions in the size and scope of government.
Yet another reason why E.U. membership is increasingly an anchor for nations that want more prosperity.
P.S. As suggested by Mr. Lynn’s column, countries in Eastern Europe should fight this scheme. After all, these countries are relatively poor (a legacy of communist enslavement) and presumably don’t want to subsidize their better-off cousins in places like Spain and Italy. But that argument also implies that they should have resisted the Greek bailout about ten years ago, yet they didn’t. Sadly, Eastern European governments acquiesce to bad ideas because their politicians are bribed with “structural adjustment funds” from the European Union.
P.P.S. The luckiest Europeans are the British. They wisely opted for Brexit so they presumably won’t be on the hook for this costly new type of E.U.-wide redistribution (indeed, my main argument for Brexit, which now appears very prescient, was that the E.U. would morph into a transfer union).
Politicians from New York want states to get a big bailout from Uncle Sam. I explained earlier this month that this would be a bad idea.
Simply stated, the Empire State is in big trouble because it has a bloated government, not because of the coronavirus.
Probably the strongest piece of evidence is that New York is ranked #50 for fiscal policy according to Freedom in the 50 States.
If you want to understand how New York’s politicians have created a fiscal disaster, let’s compare the Empire State to Florida, which is ranked #1.
I’ve already done that three times (Round #1, Round #2, and Round #3), so this will be Round #4.
The Wall Street Journal compared the two states in an editorial two days ago.
…let’s do the math to consider which state has managed its economy and finances better over the last decade. …Democrats in Albany are claiming to be victims of events that are out of their control. But they have increased spending by $43 billion since 2010—about $570,000 for each additional person. Florida’s budget has increased by $28 billion while its population has grown 2.7 million—a $10,400 increase per new resident. New York has a top state-and-local tax rate of 12.7%, while Florida has no income tax. Yet New York has a growing budget deficit, while Mr. Scott inherited a large deficit but built a surplus and paid down state debt. The difference is spending. …Blame New York’s cocktail of generous benefits, loose eligibility standards and waste. New York spends about twice as much per Medicaid beneficiary and six times more on nursing homes as Florida though its elderly population is 20% smaller. …The rate of private job growth in Florida has been about 60% higher than in New York from January 2010 to January 2020. Finance jobs expanded by 25% in Florida compared to 9.7% in New York. …The policy question is why taxpayers in Florida and other well-managed states should pay higher taxes to rescue an Albany political class that refuses to restrain its tax-and-spend governance. Public unions soak up an ever-larger share of tax dollars, but Albany refuses to change.
If you want further details on the difference between the two states, Chris Edwards takes a close look at the burden of government spending.
New York and Florida have similar populations of 20 million and 21 million, respectively. But governments in New York spent twice as much as governments in Florida, $348 billion compared to $177 billion. On some activities, spending in the two states is broadly similar… But in other budget areas, New York’s excess spending is striking. New York spent $69 billion on K-12 schools in 2017 compared to Florida’s $28 billion. Yet the states have about the same number of kids enrolled—2.7 million in New York and 2.8 million in Florida. New York spent $71 billion on public welfare compared to Florida’s $28 billion. Liberals say that governments provide needed resources to people truly in need. Conservatives say that generous handouts induce high demand whether people need it or not. Given that New York’s welfare costs are 2.5 times higher than Florida’s, the latter effect probably dominates. …New York governments employed 1,196,632 workers in 2017 compared to Florida’s 889,950 (measured in FTEs). …Most New York residents do not benefit from bloat in government payrolls, inefficient transit, excessive welfare, and deficit spending. To them, the high taxes are disproportionate to the government services received. That is why they are moving to better‐managed states with lower taxes.
Here’s the accompanying chart.
And he also compares the level of bureaucracy in both states.
New York’s excess includes spending more on handouts such as welfare. Another cause of New York’s high spending is employment of more government workers and paying them more than in Florida. …New York governments employ 34 percent more workers than Florida governments. …The two states have similar K-12 school enrollments of 2.7 million in New York and 2.8 million in Florida. But New York employs 31 percent more teachers and administrators than Florida. Do the 111,000 extra staff in New York generate better school outcomes? Apparently not…study puts Florida near the top and New York in the middle on school quality. Does New York really need two times more highway workers than Florida and three times more welfare workers? …Government workers in New York make 42 percent more in wages than government workers in Florida, on average.
Here’s the accompanying chart.
The bottom line is that New York is a great place to be an over-paid bureaucrat in an over-staffed bureaucracy.
But if you’re a taxpayer, Florida is the easy winner – which may explain why so many productive people are leaving the Empire State and permanently migrating to the Sunshine State.
When I write enough columns with the same underlying point, I sometimes create a special page to highlight the theme, such as the “Bureaucrat Hall of Fame” and “Poverty Hucksters.”
I may have to do something similar for people who assert that America’s response to the coronavirus has been hampered because the federal government is too small.
For instance, Dana Milbank wrote in the Washington Post last month that “anti-government conservatism…caused the current debacle with a deliberate strategy to sabotage government.”
Ironically, the nations he cited for their successful approach – Singapore, South Korea, and Taiwan – all have a much smaller burden of government spending than the United States.
Which actually supports my argument that bigger governments are less effective and competent.
But evidence doesn’t seem to matter to some journalists.
One of Milbank’s colleagues, Dan Balz, has just authored a long article that regurgitates the assertion that there’s been “underinvestment” in the federal government.
The government’s halting response to the coronavirus pandemic represents the culmination of chronic structural weaknesses, years of underinvestment and political rhetoric that has undermined the public trust… The nation is reaping the effects of decades of denigration of government and also from a steady squeeze on the resources needed to shore up the domestic parts of the executive branch. This hollowing out has been going on for years as a gridlocked Congress preferred continuing resolutions and budgetary caps… The question is whether the weaknesses and vulnerabilities exposed by the current crisis will generate a newfound interest among the nation’s elected officials — and the public — in repairing the infrastructure of government. …“We don’t want to invest in the capacity of government to get the job done,” Kettl said. …said David E. Lewis, a political science professor at Vanderbilt University…“We’re seeing a government that is suffering now from a long period of neglect that began well before this administration. And that neglect has accelerated during this administration.”
What’s especially remarkable is that the article cites the government’s lack of testing capacity as evidence of “underinvestment.”
Over these years, there have been a series of major government breakdowns that helped shake confidence in government’s competence. …The pandemic has forced another critical look at government’s competence. …more tests might have helped contain the spread. It is the case now as businesses look to reopen but cannot assure safety for workers or their communities without the widespread availability of tests, which so far does not exist.
Yet the bureaucracies with responsibility for testing – the FDA and CDC – have received big budget increases.
Notwithstanding all this evidence, Balz wants readers to believe that people don’t have faith in government because of hostile rhetoric from politicians.
Marc Hetherington, a professor at the University of North Carolina, said the public conversation about government began to shift with the election of Ronald Reagan in 1980. …“What changed with Reagan and the decades since is that the conversation moves away from what government ought to do to government is incompetent to do things,” he said. …Democratic politicians have engaged in some of the same kind of thing. “Every candidate has campaigned on a bureaucracy-bashing theme,” Nabatchi said. “That message has gotten through to affect people’s confidence in government.”
The alternative explanation, needless to say, is that people don’t have confidence in the public sector because government has a long track record of mistakes and incompetence.
But I guess that’s merely my opinion.
So let’s instead close today’s column with some hard data.
Here’s a chart I shared last month while debunking an article by George Packer for the Atlantic (he claimed we have “a federal government crippled by years of…steady defunding”).
It shows that federal spending has tripled since 1980. And that’s after adjusting for inflation!
Which led me to observe that, “The bottom line is that I can’t figure out whether to be more dismayed that journalists are innumerate or that major publications apparently don’t have fact checkers.”
That same sentiment obviously applies to Dan Balz and the Washington Post.
I spend thousands on hair gel alone every month. If I can’t give a press conference every night, it’s all for nothing!” Governor Andrew Cuomo of New York agreed. “We must continue this crisis as long as possible so that people will know who I am,”… A study confirmed the governors’ worst fears, showing that in states with no COVID-19 restrictions, people don’t think about the government much at all and just go about their daily lives. “We can’t let that happen,” said Michigan Governor Gretchen Whitmer.
This has been ruled to be in complete defiance of Science. …Washington Post columnist Jennifer Rubin… “Florida is undermining our trust in Science by not dying. We cannot tolerate this. More Floridians need to die. To die for Science.” California Governor and Science believer Gavin Newsom agreed. “Ron DeSantis is a witch! Burn him!” …There is now a movement by Science-believing Democrats to actively try to infect Floridians to try to get their death count to match projections.
