Thursday, April 21, 2011

Ron Paul or Gary Johnson?

With Gary Johnson's entry into the 2012 presidential race, David Wiegel has an interesting article. The article's subhead presents an interesting conflict for libertarians: with Ron Paul in the race too, who should libertarians support?

In my view, libertarians should support Johnson over Paul for three major reasons:
  • Paul's immigration stance. For all of America's bad regulations, perhaps none have a bigger humanitarian cost than immigration restrictions. For example, minimum wage laws might create unemployment. However, the suburban teenager who lost a potential job at McDonald's has lost far less than the Haitian who cannot shine shoes here legally despite suffering from dire poverty and malnutrition abroad. Unfortunately, Paul's record on immigration has been Tancredoesque.
  • The perfect is the enemy of the good. As Ilya Somin has noted, Ron Paul has opposed relatively libertarian policies such as free trade agreements and school vouchers. As Somin puts it, "[e]ven if trade agreements and vouchers are not the optimal libertarian policies, they are surely superior to the status quo of tariffs and government monopoly schooling."
  • Johnson's main issue vs. Paul's. Realistically, neither Paul nor Johnson can win the Republican nomination. Their primary value in an election is sparking a national debate over certain issues. Ron Paul's main issue is, arguably, monetary policy. And most Americans, myself included, do not care about monetary policy. Johnson, on the other hand, has made marijuana legalization one of his top issues. His focus on the issue in debates might attract young voters to the libertarian movement. After all, "legalize pot" is a far sexier political slogan than "end the Fed."

Monday, April 18, 2011

The Progressive Case Against Social Security and Medicare

As America approaches a budget crossroads, a national debate has emerged over the proper size of the federal government. Of course, Social Security and Medicare figure prominently in any such debate given that they comprise about a third of the federal budget. Given progressives' strong support for these two programs, you'd initially think these were Rawlsian transfers from the wealthy to the poor. However, the facts suggest that the egalitarian case for these programs is greatly overstated. For example:
  • (1) The payroll tax that funds Social Security and Medicare is regressive. First of all, the payroll tax is a flat rate. Second, unlike in the case of the income tax, low-income taxpayers are not exempted from the tax. In fact, only the first $106,800 of an employee's income is subject to the payroll tax. So, whereas someone with $1,000,000 of taxable income would pay $327,644 in income tax while someone with $160,000 in taxable income would pay $38,509, both earners would pay $8,170 in payroll tax (assuming a pre-stimulus 7.65% payroll tax rate). 
  • (2) Retirees are, on average, wealthier than the comparatively young workers subsidizing them.
  • (3) Social Security and Medicare are not means-tested. Some wealth transfer programs require that beneficiaries fall below a certain low income threshold to qualify. Social Security and Medicare, on the other hand, redistribute wealth even to middle class, upper middle class, and affluent retirees.  
  • (4) Rich people tend to outlive poorer people. Paul Krugman told me so. Hence, poorer retirees tend to collect Social Security benefits for shorter time periods than their richer counterparts. Social Security is an especially terrible deal for African-Americans males given that their life expectancy is about 70.
  • (5) The employer portion of the payroll tax indirectly hurts poor workers. Employers have to match their employees' payroll tax contributions. This raises the cost of hiring people and some of the tax incidence is consequently borne by workers via lower wages and fewer work opportunities.      
In summary, Social Security and Medicare, as presently constituted, are pretty lousy ways of reducing income inequality. So, if the egalitarian rationale for these programs is weak, why do progressives support them? My answer: paternalism. If you kept the 15.3% of wages that Big Brother confiscates from your paycheck, you might blow the money on sneakers with lights in them as opposed to prudently saving for your retirement. For those of us who (quite reasonably) think we can spend our money better than bureaucrats can, that is quite an offensive notion.

In any event, please save the class warfare card for other programs. Social Security and Medicare do not rob Bill Gates to feed starving Third World orphans. They rob Joe the Plumber to pay Bill the (retired) Carpenter.

Sunday, April 17, 2011

The NBA Playoffs Have Arrived

Happy NBA Playoffs everyone! This year's tagline: "The NBA. Where Big Baby Happens."

Saturday, April 16, 2011

Questions for liberals

Here is a list of questions I've long had for contemporary left-liberals. Please feel free to comment with responses:

(1) Why do you distinguish between economic liberties and so called "civil liberties?" Why respect the right to religious worship on one's own property but reject a "regulatory takings" doctrine that would protect, inter alia, the right to build homes on one's own unadulterated land?

(2) Given your sympathy for the economically disadvantaged, why do you support government policies that hurt such people (i.e. eminent domain redistributing land from poor minority groups to rich developers, payroll tax redistribution from relatively poorer young workers to relatively affluent retirees, etc.)?

(3) Given your support for abortion rights on autonomy grounds, why do you support the modern regulatory state's scores of paternalistic restrictions that infringe on people's autonomy (i.e. FDA restrictions on the pharmaceutical drugs one can buy, bans on organ sales, etc.)?

(4) Why do you think that income taxes do not discourage labor while simultaneously thinking that cigarette and carbon taxes discourage smoking and greenhouse gas emissions, respectively?

(5) How do you reconcile your anti-Citizens United position that the Bill of Rights is inapplicable to corporations with your view that restrictions on pornographic speech are unconstitutional? Should Playboy's business organization form determine its First Amendment rights? Are you willing to say that Playboy LLP should get First Amendment protection but Playboy Inc. should not?

(6) Why do you preach judicial restraint when it comes to litigation concerning economic liberty and Congress's Article I powers while supporting strong judicial review in the realm of civil liberties? If protectionist occupational licensing schemes should be challenged through the political process rather than courts, why should reproductive rights be protected by federal courts rather than local political processes?

(7) Why are you less troubled by income obtained through talent than income obtained through inheritance? Don't the poor prodigy and wealthy heiress both have arbitrary, lucky, and seemingly undeserved advantages over their less intelligent and less wealthy peers, respectively?

(8) Why are you far more supportive of Pell Grants as opposed to school vouchers? How are these two programs materially different?

I might return to these questions in the future as then-current news makes them relevant.

Blog Mission

"Some have asked if there aren’t conservative sites I read regularly. Well, no. I will read anything I’ve been informed about that’s either interesting or revealing; but I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously. I know we’re supposed to pretend that both sides always have a point; but the truth is that most of the time they don’t." - Paul Krugman

And that, right there, is my motivation for blogging. Krugman's intolerance is unfortunate. However, it is far from unique. Many people I have met in my life, ranging from teachers from my adolescence to classmates at Amherst College, would sympathize with his view. The people I'm thinking of typically accuse libertarians such as myself of having a repugnant sort of morality, being blissfully ignorant of "facts," and, most commonly, insensitivity toward the plight of the poor and ethnic minorities.

My aim in this blog is to try to correct that stereotype. As for the first charge of distorted morality, I will argue that there should be a strong presumption against the use of coercion backed by violent force (whether by state or non-state actors). I think this presumption follows from basic and widely espoused moral intuitions. As for the second charge, I will argue, mostly using the vehicle of economics, that libertarians' policy prescriptions are also largely defensible on consequentualist grounds.

I think the final charge of insensitivity toward the poor and ethnic minorities is the most common. However, it is, at the very least, highly debatable whether "progressive" government regulations and programs benefit the poor and minorities. See, e.g., eminent domain, exclusionary zoning, mandated "free" parking, minimum lot sizes, occupational licensing, certificate of "need' regulations, minimum wages, caps on credit card fees, rent controls, price "gouging" regulation, programs that redistribute to the non-poor (i.e. Social Security, Medicare, and public education), gun control, job-killing environmentalism, overtime pay rules, anti-discrimination laws, government support of labor union cartels, the doctrine of contract "unconscionability," contemporary product liability law, prohibitions on the purchase of interstate insurance, farm subsidies, many worker safety regulations, many commercial speech regulations, the FDA's extremely lengthy drug approval process, bans on organ sales, and even redistribution to the poor themselves. Moreover, the policy changes that'd arguably do the most to alleviate poverty - an open borders immigration policy, radical liberalization of global trade, and an end to the drug war - are all libertarian solutions.

My aim is not to persuade readers. Though I guess that would be nice. My aim is to alleviate political intolerance and convince progressives that, at the very least, libertarian positions are intellectually respectable.

UPDATE: H/T to Lana Harfoush for the blog name!