Prioritizing the World’s Problems
Younger Americans tend to look at the problems of the world and demand solutions. This desire for change and progress is a significant contributor to their political philosophy and political choices.
But we only have limited resources to solve those problems. In a world where reality constrains our ability to drive change, how do we reconcile our policy initiatives with resource constraints?
This article suggests a way – simple cost / benefit analysis — with fascinating implications for real policy.
The pain caused by the global food crisis has led many people to belatedly realize that we have prioritized growing crops to feed cars instead of people. That is only a small part of the real problem.
This crisis demonstrates what happens when we focus doggedly on one specific – and inefficient – solution to one particular global challenge. A reduction in carbon emissions has become an end in itself. The fortune spent on this exercise could achieve an astounding amount of good in areas that we hear a lot less about.
Research for the Copenhagen Consensus, in which Nobel laureate economists analyze new research about the costs and benefits of different solutions to world problems, shows that just $60 million spent on providing Vitamin A capsules and therapeutic Zinc supplements for under-2-year-olds would reach 80% of the infants in Sub-Saharan Africa and South Asia, with annual economic benefits (from lower mortality and improved health) of more than $1 billion. That means doing $17 worth of good for each dollar spent. Spending $1 billion on tuberculosis would avert an astonishing one million deaths, with annual benefits adding up to $30 billion. This gives $30 back on the dollar.
Heart disease represents more than a quarter of the death toll in poor countries. Developed nations treat acute heart attacks with inexpensive drugs. Spending $200 million getting these cheap drugs to poor countries would avert 300,000 deaths in a year.
A dollar spent on heart disease in a developing nation will achieve $25 worth of good. Contrast that to Operation Enduring Freedom, which Copenhagen Consensus research found in the two years after 2001 returned 9 cents for each dollar spent. Or with the 90 cents Copenhagen Consensus research shows is returned for every $1 spent on carbon mitigation policies.
The Bottom Line on Tax Policy
As I’ve pointed out before on this blog, there’s a gap between economic interest and voting patterns of younger Americans. I believe that much of this gap is explained by the fact that many younger Americans haven’t been taught the basics of economics. Obviously, this comes into play as we consider tax policy.
This recent article in the Wall Street Journal presents some pretty revolutionary and indisputable facts about tax policy in this country:
The interactions among the myriad participants in a tax system are as impossible to unravel as are those of the molecules in a gas, and the effects of tax policies are speculative and highly contentious. Will increasing tax rates on the rich increase revenues, as Barack Obama hopes, or hold back the economy, as John McCain fears? Or both?
Mr. Hauser uncovered the means to answer these questions definitively. On this page in 1993, he stated that “No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP.” What a pity that his discovery has not been more widely disseminated.
The chart nearby, updating the evidence to 2007, confirms Hauser’s Law. The federal tax “yield” (revenues divided by GDP) has remained close to 19.5%, even as the top tax bracket was brought down from 91% to the present 35%. This is what scientists call an “independence theorem,” and it cuts the Gordian Knot of tax policy debate.
The data show that the tax yield has been independent of marginal tax rates over this period, but tax revenue is directly proportional to GDP. So if we want to increase tax revenue, we need to increase GDP.
What happens if we instead raise tax rates? Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser’s Law says it will also lower tax revenue. That’s a highly inconvenient truth for redistributive tax policy, and it flies in the face of deeply felt beliefs about social justice. It would surely be unpopular today with those presidential candidates who plan to raise tax rates on the rich – if they knew about it.
An amazing truth has been revealed by a simple analysis of the data. Raising taxes on the rich will not reduce our deficit or fund more social programs, because it’s revenue impact is negligible.
The only tax poicy that makes sense is one that encourages economic growth.
I Love Massachusetts
Really, I do. It’s where I grew up. And Boston has got to be one of the best, if not THE best, city in the country.
But Massachusetts has a bad habit of electing corrupt, incompetent government. From $200 million high schools to release programs for felons who go on to rape children and kill cops, Massachusetts is all about governmental irresponsibility via well intentioned but misguided liberal policies.
I am in MA visiting right now. Last night I ran smack into a prime example of corruption and incompetence and I figured I would blog about it.
Last night I was driving north up I-93 into Boston. For those of you who don’t know Boston, I-93 is one of the two main highways into the city along with I-90. It’s a four lane highway both ways and feeds directly into the Big Dig. Anyway, the geniuses in our state government decided to block off two lanes north (into Boston) for “paving” for about (literally) 10 miles. This caused a massive traffic jam at 9 o’clock on a Saturday night, which I was privileged to sit in for 45 minutes.
(In green terms, that’s a lot of wasted gas and unnecessary emissions. For you economists out there, think of the opportunity cost to the economy (time wasted) of that traffic jam.)
The kicker with this particlar construction project was that, of course, there was no actual paving going on. Not one construction vehicle was even on site across the entire 10 miles, let alone actually paving anything.
That being said, every mile or so there was a state trooper parked with his lights flashing, on “detail” collecting overtime over whatever overtime they already collect on a Saturday night.
That’s corruption and incompetence for you.
This is what happens when you elect someone a candidate with no substance and clever rhetoric to chief executive office.
The Economy, Stupid
We’ve all heard how bad it is.
And on Friday, after the most recent jobs report — which produced a much-smaller-than-expected decline in corporate payrolls, a huge 362,000 increase in the more entrepreneurial household survey (the best gain in five months), and a historically low 5 percent unemployment rate (4.95 percent, to be precise) — the president told reporters: “This economy is going to come on. I’m confident it will.”
We’re in the midst of the most widely predicted and heralded recession in history. Problem is, so far it’s a non-recession recession. Score one for President Bush. In an election year, it could be a big one.
First-quarter GDP growth came in at 0.6 percent. It wasn’t the widely predicted decline, and economists expect that number to be revised up. GDP growth for the fourth quarter of 2007 was also up slightly, while the prior two quarters averaged over 4 percent growth….
Interesting — isn’t it? — just how durable and resilient our low-tax, free-market, capitalist economy truly is. Hit by soaring food and energy prices, a bad housing downturn, and a Wall Street credit crunch, the economy continues to expand, albeit slowly.
The media and the Democrats would like us to believe the economy is a disaster. But our economy is cyclical by nature, and this downturn may not even be as lasting as most.
The Trouble with Obama
Despite a rather profound dislike of Hillary Clinton’s character and public persona, American Gerontocracy endorses her for the Democratic Presidential nomination — with the firm expectation that Obama will, in fact, be the eventual nominee.
Obama is an emotionally compelling candidate because of his rhetorical gifts and his charismatic presense. But what does he really bring to the table? I think most votes would agree that it isn’t his experience, since he has very little. He has never worked in the priate sector. He has never served in the military. He has basically been involved in local politics for almost his entire life, with the exception of a few years of national service in the Senate. He has zero executive experience. By any objective standard, he isn’t ready to be Commander-in-Chief.
(It’s interesting because when you break it down, Obama has almostnothing in common with the average American — blue collar or white collar. His ethnic backgrund, his international upbringing, his Ivy League education, his lack of true real work experience or military service…. All reflect a life history profoundly different from that of 99.9999% of Americans.)
But, his proponents argue, Obama has better judgement than the alternatives. On that basis, he should earn our votes. But does Obama really have good judgement? And how are we to know if he does, since Obama lacks any track record?
This is why Obama’s relationship with Rev. Wright is relevant. As the Wright issue reemerged front and center over the last week, we’ve been given new insight into Obama’s character and his response to pressure:
But we did gain a new perspective on Wright’s former parishioner, Senator Barack Obama. And it’s not flattering. It took the Democratic frontrunner 20 years–and 50 days since videos surfaced of Wright’s incendiary sermons–to discover that the man who helped him become a Christian, officiated at his marriage, and baptized his two daughters is a conspiracy theory-loving self-publicizer. What does that say about Obama’s “judgment,” on which he largely bases his claim to the presidency?
Worse, one of the main reasons for Obama’s unequivocal split from Wright had nothing to do with the reverend’s hateful ideology. You see, Wright had the temerity to suggest that Barack Obama is just another pol. “What I think particularly angered me was his suggestion somehow that my previous denunciations of his remarks were somehow political posturing,” Obama said. This only confirms Obama’s reputation for being thin-skinned and self-absorbed.
Months ago, when Wright first became an issue in the campaign, many chose to believe the explanations of the Obama campaign that Wright’s words were taken out of context. That they did not adequately represent the compass of Wright, the man. Even Obama excused him as the product of his times, when he said: “”I could no more disown him than I can disown my white grandmother.” And yet, in the last week, Wright’s words — and actions — have shown him to be an irresponsible radical and a racist. Yes, a racist – per Wright:
On Sunday in Detroit, he explained to 10,000 people at the Fight for Freedom Fund dinner of the NAACP — an organization adept at taking offense at far less racist comments from nonblacks — that whites have an inherent “left-brain cognitive, object-oriented learning style. Logical and analytical,” while blacks “learn not from an object but from a subject. They are right-brain, subject-oriented in their learning style. That means creative and intuitive. The two worlds have different ways of learning.”
Blacks even have better rhythm, Wright explained.
And, in fact, for political expediency, if nothing more, Obama has now contradicted his own words and finally disowned Wright.
Amazing. So where is the spectacular judgement that Obama’s backers tout? I don’t see it. And yet the media continues to go easy on Obama, even as he begins to show more and more of his true character as the pressures of the campaign ratchet up.
It’s tempting for younger voters to fall for the Obama mystique…. But politicians have been fooled before — George W. Bush being the perfect example.
RSS Feed
