Megan McArdle muses on why things go farther than anyone expects

"Trump is no great moral theorist, but he does have a certain cunning about human behavior, enough, possibly to foresee that the Great Statucide would proceed by what conservative writer Rod Dreher has dubbed “the Law of Merited Impossibility”: Conservatives warning about the dire consequences of some social change are dismissed as hysterical cranks — and then, when exactly what they predicted eventually comes to pass, denounced as bigots for opposing the new order. Implicit in Dreher’s law is an intermediate phase in which a large number of people sit uncomfortably silent as the radicals take the moderate majority’s well-intentioned efforts further than they ever dreamed.

"If you had told me 10 years ago that same-sex marriage meant Christian bakers being legally required to bake cakes for same-sex weddings, I, or any supporter of marriage equality, would have dismissed this as conservative propaganda, too silly to even bother refuting. Probably someone did tell me that, at some point; probably I laughed and said, “Come on.”

"Then, shortly after the Supreme Court ruled, activists began declaring that of course those bakers had to bake those cakes. Privately, one heard from a lot of same-sex marriage advocates who thought this went too far. But publicly, they found other things to talk about. And so the default position on the left became exactly the sort of thing that everyone had declared would never happen.

"What Trump understood, and his critics perhaps didn’t, was that you cannot credibly declare that some revolution in social affairs has a natural stopping point unless you personally commit to stopping it when it goes too far. It’s not enough to say that very clear distinctions can be drawn between allowing gays to marry and forcing people to cater weddings that conflict with their religious beliefs; between the father of our country and the traitor who led a rebel army in defense of slavocracy. When the moment arrives, you have to actually draw them.

"If you don’t, you will cede issue after issue to the radicals. And if uou make those tacit concessions again and again and again, then however privately you may rue it, you will nonetheless end up with something very different from your idealistic vision. Something that looks like ... well, like the Republicans who quietly ceded their party and their conscience to Trump, one outrage at a time."

Where's the money going?

Yet another economist (this time, Tyler Cowen) wrote an article on the recurrent theme The Jobs Are There. Where Are the Wages? -- The U.S. just completed one of its worst decades ever for payroll growth.

But really, what employees get from their employers hasn't done that badly. From elsewhere: "One recent study shows that, between 1970 and 2016, the earnings that laborers received fell twenty-one per cent. But their total compensation, taken to include the cost of their benefits (in particular, health care), rose sixty-eight per cent." That latter number is 1.1% per year, which isn't bad historically. What workers are getting is not money but high-priced medical care.

You could argue that the US medical industry is particularly inefficient at delivering health for money, and you'd be right. But then, it seems that this is because the US medical industry pays particular attention to what the customers want. One recent study determined that patients' ratings of hospitals was entirely uncorrelated with medical outcomes, but was strongly correlated with "the concierge experience". And as has been true throughout history, the rich get doctors who have good bedside manner, not doctors who are particularly effective. What makes European socialist medical systems so efficient in delivering health is that they are run by bureaucrats who care about medical outcomes, but don't care much about patients' concierge experiences.

Deaths of despair -- a possible way forward

Economic Principals discusses the phenomenon of “deaths of despair”. Following the links, it seems that this phenomenon is unique to the United States, despite that working-class people (men especially) have been hard-hit by globalization in all the advanced countries.

During the tedium of the Coronavirus-19 pandemic is a terrible time to publish a book on suicides, drug overdoses, and alcohol abuse among middle-aged white Americans. It may or may not be a great time to read one. See Atul Gawande’s superb review of Deaths of Despair and the Future of Capitalism, by Anne Case and Angus Deaton in The New Yorker, and decide what you think.

(A side note that blacks in the US are reported to have been largely spared this phenomenon. But if you’re black, it’s easy to be optimistic, because racism has been receding for decades, and you can imagine that the future will be better. And surveys bear this out.)

The referenced works dig into the problem, and it seems that the proximate cause is that there’s a big slice of the middle-aged population that has dropped out of the work force, and they are the prime candidates for “deaths of despair”. Or as one article said, “deaths of pointlessness”.

They go on to point out the characteristic of the US medical system that is the root of so many complaints, despite that very few articulate it correctly: Each person pays for their own medical insurance. In other advanced countries, even if they don’t have a “single-payer” system, payment is a tax on wages, and so is redistributive. In the US, even under Romneycare, payment is redistributed from the healthy to the chronically sick, but not from the affluent to the poor, and so is highly regressive. And if you’re a middle-aged man and your future employment prospects are dim, our culture doesn’t value you and there’s no reason not to take up drinking as a lifestyle.

The next cause behind that seems to be that given that most jobs include medical insurance as non-cash pay, the visible incentive to work is much blunted unless you can command a good wage:

“As they show, the premiums that employers pay amount to a perverse tax on hiring lower-skilled workers. According to the Kaiser Family Foundation, in 2019 the average family policy cost twenty-one thousand dollars, of which employers typically paid seventy per cent. “For a well-paid employee earning a salary of $150,000, the average family policy adds less than 10 percent to the cost of employing the worker,” Case and Deaton write. “For a low-wage worker on half the median wage, it is 60 percent.” Even as workers’ wages have stagnated or declined, then, the cost to their employers has risen sharply. One recent study shows that, between 1970 and 2016, the earnings that laborers received fell twenty-one per cent. But their total compensation, taken to include the cost of their benefits (in particular, health care), rose sixty-eight per cent. Increases in health-care costs have devoured take-home pay for those below the median income. At the same time, the system practically begs employers to reduce the number of less skilled workers they hire, by outsourcing or automating their positions.”

One way to improve things would be to change how medical insurance is paid for, from each person paying their own (mostly) to (essentially) a wage-based tax. Right now, there’s a big “cliff” when someone goes from being “on welfare” to employed, because the government stops paying around $10,000 per year for their medical coverage. Typically the official minimum wage, what the employee gets, is around $7/hour but the compensation cost, what the employer pays, is around $12/hour. Changing this would drastically improve the employment prospects of low-skilled Americans.

One problem is how to achieve that. We probably politically can't revamp such a large part of our economy as a wage-based tax. But there is one opening -- part of the 1990's welfare reform was elminating the infamous "welfare cliff" -- you lose all your benefits as soon as you earn a single dollar -- with the consent of Republicans, under the banner of "Making Work Pay". Republicans can be sold on the idea that the government has screwed something up in a way that disincentivizes work, and are even willing to spend government money to fix it.

In this case, there's a "Medicaid cliff" -- as soon as you get a "real job", you lose $10,000 a year in medical insurance, and your employer picks up the entire bill. (Or at least, a larg chunk of fit; I can't figure out whether there's an ACA subsidy or not.) We could arrange that the employer's insurance premium is largely paid for by the government for the lowest-wage workers. Depending on how the labor market shakes out, that would either substantially increase the incentive for people to take jobs, or substantially increase the incentive for businesses to hire people, or both. And we just might be able to get it through Congress, if we pitch it as a way to get poor people to work rather than as a way to deliver medical care to poor people.

Liberalism, Populism, and Christian Ethics

Populism has had as many incarnations as it has had provocations, but its constant ingredient has been resentment, and hence whininess.
-- George Will

(I wrote this to a friend of mine who is an Episcopalian Christian.)

I ran into an odd sequence of events which made me realize that the current wave of populism (as exemplified in the US and UK) is not only different from, but substantially antithetical to, liberalism (in the modern sense). And that looking at this difference through the lens of traditional Christian ethics makes the difference very clear, even if one is not a Christian.

The triggering event was an item on Facebook, where someone complained that Gilead pharmaceuticals was going to make remdesivir (the new Covid drug) too expensive, causing all sorts of bad things to happen. I added a comment that the smart way out of this problem was for the US federal government to seize the patents by eminent domain and give the rights to the world. This would cost only a few billion dollars (a drop in the bucket as epidemic expenses go), buy the US a few billion friends, and (since Gilead's investors still get their profits) provides no disincentive for investors to pay for further drug research.

And then, more out of experience than reflection, I added the dyspeptic comment that we would not do this, and nobody would even advocate for doing it.

After a couple of days, this caused me to remember an analysis of populism that I had read. I wrote a summary of that analysis in The essence is that populism is observed to break out during good times (rather than bad times) because good times increase inequality -- everyone does better, but the rich do especially well in good times, and that breeds resentment. If you track back to the working paper that it is based on, a central point is "As a result, inequality is driven by the high consumption of the rich rather than the low consumption of the poor. Aversion to inequality thus reflects envy of the economic elites more than compassion for those left behind."

Applying that principle to drug company profits, the prime objection is not that the poor can't get expensive drugs, but rather than drug companies make a lot of money. And the desired cure, indeed, the goal, is not to give poor people drugs for cheap but rather to despoil the drug companies (and their investors) of their profits.

Liberalism is based on compassion for the poor; as an economist would put it, a desire to increase the consumption of the poor. This is, of course, the traditional Christian virtue of Charity.

The populist position requires more care to classify. The traditional sins of Gluttony, Avarice, and Lust are natural human desires, when they are unbridled to the point of harming one's self or others. The traditional sin of Envy is more complicated: It arises when one desires something *because* one observes someone else to posses such a thing. And it is this element of Pride (pure competition) that makes it more severe than Gluttony, Avarice, and Lust.

A worse sin still is Jealousy: It contains not just the desire to possess the thing, but more centrally, the desire to prevent someone else from having it. And it is this essential desire to harm someone else that makes Jealously in turn worse than Envy.

Summing up, while liberalism fosters equality, it does so by means of Charity, aiming to make the lot of the poor better. But populism fosters equality by means of Jealously, aiming to make the lot of the rich worse.

"Populism: Why in rich countries and in good times"

This is a fascinating article that not only clarifies the dynamics of the current style of populism (anti-globalism) but points out why this sort of disgruntlement comes when people are doing better than they have for many years. It contains a wonderful selection of phrases, such as "When the economy is strong, everyone fares well but the rich fare especially well", "a disproportionately large drop in consumption is suffered by the rich, which appeals to voters by reducing inequality", and "equality is a luxury good of which a society demands more as it grows wealthier". Ultimately, a majority gets to the point they are willing to sacrifice some part of their own consumption to bring down the elites, and elects a populist to cut back on globalization. (Or perhaps in extreme cases, starts a revolution.)

Topically, this was written before the Covid epidemic, but a natural consequence is that when people fear things are falling apart, populist tendencies will abate, as people prioritize maintaining their own consumption over equalizing their betters with themselves.

If you follow the references, their paper models this and finds that inequality tends to grow until the conspicuous consumption of the well-off pisses off the voters. They add to their model various typical redistributive measures, but find that the dynamic is very hard to suppress -- basically, you have to tax conspicuous consumption of luxury goods enough to fully compensate for the degree to which it annoys the less well-off, but the amount of annoyance is proportional to the number of the less well-off rather than to the number of the rich.

The paper does speculate that a more effective approach would be to reduce the "background risks" that ordinary people have to endure, which should make them more willing to engage in the riskier ways to make more money that globalization provides. They suggest socially-provided medical insurance. There are also various "income insurance" or "layoff insurance" concepts that have been floated.

Economic anxiety and insecurity are often cited as drivers of populism, so why has populism emerged over the past few years in rich countries and in good times? This column, part of the Vox debate on the topic, argues that income inequality plays a role. When the economy is strong, everyone fares well but the rich fare especially well, fuelling inequality and resentment. Populism in the form of anti-globalisation may reduce everyone’s consumption, but it affects the rich disproportionately and thus appeals to many voters in richer countries. In poorer countries, however, voters are less willing to give up consumption for equality.

The effect of voter ID laws

An interesting paper assessing the effect of strict voter identification laws. The short version is "They don't do anything at all".
U.S. states increasingly require identification to vote -- an ostensive attempt to deter fraud that prompts complaints of selective disenfranchisement. Using a difference-in-differences design on a 1.3-billion-observations panel, we find the laws have no negative effect on registration or turnout, overall or for any group defined by race, gender, age, or party affiliation. These results hold through a large number of specifications and cannot be attributed to mobilization against the laws, measured by campaign contributions and self-reported political engagement. ID requirements have no effect on fraud either -- actual or perceived. Overall, our results suggest that efforts to reform voter ID laws may not have much impact on elections.

Further down in the paper they do state "These results contrast with the large participation effects of other dimensions of election administration: voter registration laws, convenience voting, voting technology, and distance to the polling station." So there are things to worry about, but not identification.

News media seem to trail public opinion on the economy, not lead it

528 reports "And if we drill down into one of the most prominent media outlets we analyzed, The New York Times, we find no indication that media coverage is shaping public opinion. A telltale sign of media influence would have been if the tone of the Times’s economic coverage shifted before public perception does. But as you can see in the chart below, that didn’t really happen. Instead, the public’s perceptions of the economy more often seemed to lead news coverage rather than lag behind it."


One of the things that makes the current wave of populism hard to discuss is that there are at least two populist revolts going on (in the US right now): the working class against the professional class, and the professional class against the business-owning class ("the one percent").

Vaccination as a cause of women's equality?

I ran into an interesting paper on the causes of women's equality. The introduction starts with the stirring analysis
One of the greatest achievements of the world during the twentieth century has been the progress made toward gender equality. Comparing the role of women in economic and social life in 2000 relative to that in 1900 reveals the remarkable changes that occurred in terms of women’s legal status, political rights, access to the labor market, and other areas. Yet, nowhere is this change more visible than when looking at female educational attainment. In many countries of the world, women nowadays outperform men in all levels of education, to the point that the relative under-performance of men is being considered an emerging problem.

The progress achieved by women in terms of their educational attainment relative to men can be seen in Fig.  1. The fgure depicts the evolution of the female-to-male ratio of average years of schooling over the twentieth century for a broad sample of 146 countries based on data from Barro and Lee (2013). In the beginning of the century, this ratio fluctuated around 0.75, implying that women had on average only 3/4 of the years of schooling that men had. Following World War II, though, we see a clear upward trend in this ratio, as female educational attainment began to catch up. By 1990 women had similar levels of schooling than men in many countries of the world and subsequently their educational attainment began to surge ahead.

The paper goes on to propose that a major cause was large-scale vaccination. They say that women develop stronger immunity from vaccination than men on the average, and so vaccination tends to increase women's life expediencies more than men's. This increases the incentives for women's education more than the incentives for men's education.

What makes this testable is (1) The rich world sponsored a world-wide vaccination campaign over a fairly short period of time, so the reduction of vaccinatable diseases happened in many countries of widely varying characteristics independently of their economic status, and (2) The fraction of the health burdens of a country which were due to which vaccinatable diseases varied greatly.

The correlations suggest that indeed, vaccination increased women's relative life expectancies and this was a driver in increasing women's education vis-a-vis that of men.

'Twas ever thus

A professor reports on giving a seminar on the history of epidemics:
Every disease provokes its own unique dread and its own complex public reaction, but themes recurred across outbreaks.
  1. Governments are typically unprepared, disorganized, and resistant to taking steps necessary to contain infectious diseases, especially in their early phases.

  2. Local, state, federal, and global governing bodies are apt to point fingers at one another over who’s responsible for taking action. Clear lines of authority are lacking.

  3. Calibrating the right governmental response is devilishly hard. Do too much and you squander public trust (Swine flu), do too little and people die unnecessarily (AIDS).

  4. Public officials are reluctant to publicize infections for fear of devastating the economy.

  5. Doctors rarely have good treatment options. Nursing care is often what’s needed most. Medical professionals of all kinds work themselves to the bone in the face of extraordinary danger.

  6. In the absence of an effective treatment, the public will reach for unscientific remedies.

  7. No matter what the route of transmission or the effectiveness of quarantine, there’s a desire to physically separate infected people.

  8. Victims of the disease are often thought to deserve the affliction, especially when those victims are mainly from marginalized groups.

  9. We plan, to the extent we plan at all, for the last pandemic. We don’t do enough to plan for the next one.

  10. Historical memory is short. When diseases fall from the headlines, the public forgets and preparation falters.

Not every one of those themes was present for every disease; the doughboys who died of the Spanish flu, for example, were not thought to deserve their fate. But the themes were persistent enough over time to establish a pattern.