Monday, February 28, 2011

Goerge Will: Why Look For Facts When You Can Make Stuff Up

An incredible hollow man argument from George Will:
To progressives, the best thing about railroads is that people riding them are not in automobiles, which are subversive of the deference on which progressivism depends. Automobiles go hither and yon, wherever and whenever the driver desires, without timetables. Automobiles encourage people to think they—unsupervised, untutored, and unscripted—are masters of their fates. The automobile encourages people in delusions of adequacy, which make them resistant to government by experts who know what choices people should make.
I understand that various right-wingers are giddy with this so-called point, never mind that neither they nor George Will could identify one such "progressive" if their lives depended on it.


Paul Krugman:
[I]t’s amazing to see Will — who is not a stupid man — embracing the sinister progressives-hate-your-freedom line, more or less right out of Atlas Shrugged; with the extra irony, of course, that John Galt’s significant other ran, well, a railroad.
John Casey:
This argument, such as it is, is classic Will: The most dishonest kind of straw man used to provoke an explanatory hypothesis about the the straw manned arguer's motives and intellgence in making such bizarre and wrong-headed claims. On the strength of this, you'll feel justified in ignoring anything else such a person would say.
Sarah Goodyear:
A couple of things here. First off, automobiles are not the only vehicles capable of encouraging "delusions of adequacy." Bicycles, one might argue, are a lot more capable of encouraging such delusions -- fueled as they are entirely by the body of the "unscripted" individual. Which is perhaps why they seem to enrage people in cars, who have to worry about gasoline and the like, so very much.

Second, let's talk about modern air travel. What mode of transport is more capable of sapping the human sense of possibility, more confining of the untrammeled human spirit? Perhaps before Will goes after high-speed rail, he should call for the defunding of the Federal Aviation Administration.

The Decline and Fall of Organized Labor

Once you get past his distorted, myopic history of the labor movement, Robert Samuelson makes some valid points about organized labor. Without rehashing the history of unions, I'll leave my response to his myopia at this:
It's hard for us to recall now how dominant unions were immediately after World War II. By the mid-1950s, unions represented 36 percent of private-sector workers. Most major industries were organized: railroads, coal, steel, autos, telephones, tires, airlines, trucking. Strikes in crucial industries constantly threatened to hobble the entire economy, though in practice, companies stockpiled steel and coal in advance of contract expirations, and Congress cut short railroad strikes.
Samuelson's argument undermines the common Republican prevarication that businesses won't open, expand or hire without absolute certainty as to the future state of the economy and tax rates, as if such certainty were possible. But more to the point, which would you choose? Samuelson's past in which businesses were theoretically at risk of having "" hobbled, yet the economy experienced dramatic growth and a vibrant middle class emerged, or the present era in which businesses see massive profits, the wealthiest Americans continue to gain in gross disproportion to the rest of society, while the economy stagnates? If Samuelson is trying to depict the present economic malaise as an improvement over the 1950's, he needs to re-check his facts.

I can respect the utopian argument that enlightened management policies through the same era might have brought about the same or better growth, and a similar emergence of a strong middle class, without the participation of organized labor, but... here I am, stuck in the real world in which that would not have happened.

Samuelson correctly observes that a large part of the reason unions have faltered is that they have failed to adapt to changes in the marketplace. He elides the fact that many of the changes were far outside of their control - and many were in fact the result of industry lobbying for legislation and trade policies that were intended to weaken unions - but it's nonetheless true. As companies exploited "right to work" laws and overseas factories in order to avoid unionizing, the unions didn't look toward the future - or even to a nation like Germany in which unions have remained strong in association with high-tech manufacturing. Instead they seemed intend upon preserving an unsustainable status quo. (It's my understanding that Germany's labor laws make it relatively easy for workers, dissatisfied with one union's representation, to switch to another - so I can't say I'm surprised that U.S. unions weren't eager to advocate for a similar model.)

To paraphrase a frequent visitor, CWD, labor agreements are negotiated between employers who would prefer to have employees do a lot of work for no wages, and unions who would prefer to have workers do no work for high wages, with the two sides entering into a labor agreement reflecting some sort of compromise between those two extremes. Occasionally a union leader has attempted to shift the relationship from purely adversarial toward mutually beneficial strategic planning, and occasionally large corporations have experimented with novel union contracts, but for the most part no effort is made to get outside of the adversarial status quo, and efforts to take a different approach seem to be rebuffed or quickly abandoned as "too hard".

Samuelson is also correct that both unions and the major industries that provided the bulk of unionized positions failed to see how a globalized economy would affect them. Even as the Big Three auto manufacturers were building plants in Mexico and developing overseas markets, they often stumbled both in terms of their product offerings and in terms of product quality. Meanwhile a different type of "union" arose - trade associations, such as NADA, that were incredibly successful at getting state legislatures to pass laws to protect the markets and profits of car dealerships.

To a significant degree, the lobbying efforts of major corporations helped create an advantage for foreign companies entering the U.S. market. As foreign car manufacturers entered the U.S. markets they were able to both exploit "right to work" laws so as to largely avoid unions, and to create smaller dealer networks rather than being trapped into an existing structure of dealerships created before states passed laws that would hamper their ending their relationships with unneeded or poor quality dealerships.

One thing that Samuelson's column highlights is the role of public relations in the decline of organized labor. When you read a screed against unions, you'll usually see a list of excesses offered as a justification for reducing or eliminating the rights of workers to organize. "There's a police officer in New York who retired with a huge pension, more than his final year's salary, so public workers in Wisconsin shouldn't be allowed to unionize," or "My daddy was a management negotiator back in the 1950's and due to vague union threats we had a police car parked outside of our house during a round of negotiations, so unions are uniformly evil." The fact that those arguments from anecdote aren't logically sound isn't the point. The fact is, most people have at least one similar "union story" they can share, so for people on the outside of unions it's pretty easy to succumb to the idea that unions are, on the whole, a negative force. I have a relative who worked in union jobs for her entire career, but openly detested every union except the one she happened to be in at the time - that one offered important job protections against unreasonable managers.

It's not that unions have been completely blind to the P.R. war, and the low number of strikes in recent decades stands as evidence that unions understand that, for the general public, their work stoppages translate into a perception of "How dare your union inconveniece me." But while every union contract involved a management negotiator, unions have failed to remind the public of that, or to create an effective counter-argument, when the media starts talking about the "rubber rooms" of New York Schools or the "jobs bank" at General Motors. They have not been good at creating a public perception that it's perfectly appropriate for the union to stand behind a member who is facing disciplinary proceedings and to make the employer prove its case that the worker should be fired - that protecting its members from inappropriate discipline is a core function of its job. That when management fails to follow proper disciplinary procedures, fails to properly document discipline, and otherwise fails to follow the rules it negotiated and accepted in the last round of union negotiations, such that a worker who deserves to be fired ends up being retained, that's management's fault.

Unions have also failed to recognize how the public perceives some of its actions. It's legitimate to protect workers' jobs and to attempt to have employers retain and retrain workers as new technologies emerge, but the general public will never smile on featherbedding. It's fine to require that employers respect the divisions between categories of worker, so as to not have a lower paid category of workers displace jobs in what should be a higher paid category, but things reach the point of absurdity when every job description has to describe as a job duty, "...and other tasks as assigned by your supervisor," lest the worker be able to protest, "My job description says I am to copy and collate documents, but it's not my job to staple them." The public does not appreciate the conception that it's management's job to ensure that workers do their jobs and care about quality, and that when the culture of workers trends toward laziness and inefficiency the union should bear no blame. Many people, in the past, have attempted to obtain union jobs only to find out that next to no one gets hired unless they're a friend or relative of a current worker. Yes, it's difficult to both be strong advocates for workers and to stay in front of a P.R. war that depicts every union success as a tragedy for society, but nobody ever said running a union would be easy.

For that matter, many unions seem to take for granted that their job should be easy. Organize a workplace, collect dues, attempt to impose a pretty standard contract on the employer, and not do a heck of a lot more until the next round of negotiations. "For only $50 per week in union dues, we'll get you an extra $60 per week in income (if your employer doesn't shut down to avoid having a union factory)." When the going gets tough, some unions seem far too quick to pit classes of employees against each other (existing workers get package X, new workers get package Y). If you create a culture in which workers don't like, don't trust, feel underserved by, or resent their own union, what sort of future do you think you're creating for the labor movement?

Organized labor has also done a poor job of demonstrating why it is still needed (see, e.g., anti-union comments to the effect of, "Now that we have OSHA, we don't need unions to ensure workplace safety") or why non-union workers should view them as a positive. Why should workers who don't enjoy the benefits and protections of union membership celebrate the fact that their unionized brothers and sisters have more job security, better benefits, and perhaps also better pay? Why haven't unions been able to communicate how their past efforts have contributed to the economic rise of workers across the job market, and that part of the reason that non-unionized workers are presently suffering is that organized labor is weak? As Samuelson observes, "If public-sector unions fail, Little Labor could become Mini Labor." So whatcha gonna do about it?

Finally, Some Truth from Gadhafi

Gadhafi: "My people love me".

Absolutely true. In fact, it looks like an overwhelming majority of his countrymen would be ecstatic if only given the chance to love him to death.

He appears to have developed a remarkable method of proving the love of his people. Point a gun at somebody and ask, "Do you love me?" Followed by, "Would you die for me?" And, surprise, your approval rating ends up somewhere in the high 90's.

Saturday, February 26, 2011

Who Else, Indeed....

I keep seeing this rather silly point raised in relation to public sector unions:
They're influential in a special way: Who else gets to help choose the people who set your salary?
To start with, many CEO's of publicly traded companies, whose pay trends toward the astronomical with little regard for performance. Except when was the last time you heard somebody decry a CEO's often disproportionate influence in the choice, compensation and retention of those who set his pay while the board was simultaneously slashing his salary. I'll make that even simpler: When was the last time you heard of a board slashing a CEO's salary?1

There's something incongruous about making such a claim is made about public sector unions, even as they're threatened with abolition by elected officials.
1. CEO salaries are, it seems, often set by "Lake Wobegon" standards.

Friday, February 25, 2011

The Perils of Standardized Testing

I was recently speaking with a career college professor who described to me his frustration with a class of students he's teaching. Having given them their first exam, a take-home assignment, he had found that only a couple of the students had written adequate papers. So he returned the students' papers, having duly marked them up with comments, and asked them to revise their submissions and turn them in the following week.

This brought to mind something I read recently, that scarcely more than a third of college graduates can successfully write an essay comparing two newspaper articles. "That's what I asked them to do," the professor said. Not two articles, but two pieces of poetry. "I can't simply ask them to analyze one poem, because most of them will search the Internet and copy what they find. This is the only way I can be sure I'm getting their own work."

A few months ago I read somebody's short-sighted retort to critics of high-stakes standardized testing. He gave an example of a question from a standardized test and asked, "Isn't this exactly what students are supposed to be learning?" But no, although I'm willing to allow for much greater emphasis on basic comprehension in the early grades, reading a few paragraphs and answering a series of multiple choice questions pertaining to that block of text is not a fair test of what students should be learning. High school students should be able to write essays comparing two newspaper articles or poems. College students should not be stumbling over such a basic task. For most college graduates to still struggle? Something is very wrong.

Two things, perhaps. First, it suggests that standardized tests are focused on the easily measurable, which means concrete tasks and concrete thinking, not more complex, abstract tasks or abstract thinking, and if students are unfortunate enough to be in a school district that spends a considerable amount of time "teaching to the test" they may become masters at reading a few paragraphs of text or a simple math problem then "ruling out the two unlikely answers and choosing the most likely of the two remaining answers", but aren't being prepared for more complex analysis, problem solving, critical thinking, or reading longer form materials.

Second, it reinforces the fact that not all students are college material. Some may become college material after a year, two years, or perhaps ten or more years in the working world. Some will be much better served by vocational training, a modern form of apprenticeship, or by simply entering the job market. Even if we ascribe some of the poor analytic performance of college grads to the colleges themselves, if that statistic is accurate it still suggests that about half of the students who presently attend college aren't likely to get much out of the experience - four years of expensive life-postponement. Nobody should view that as acceptable.

Wednesday, February 23, 2011

It's Time for $5 per Gallon Gas?

Three years ago, Thomas Friedman was observing how $4 per gallon tax influenced consumer behavior. There was truth in his observation - when gas prices passed $4 per gallon, many consumers had a hard time filling their gas tanks. We had people who literally had to choose between buying gas to get to work and making timely mortgage payments. Before you knew it, two of the "Big Three" U.S. auto manufacturers were in bankruptcy and the housing bubble burst. Ah, good times, good times.

Some of us see the return of $4+ gasoline as an inevitability have wondered what effect that will have on our largely jobless recovery from our post-housing bubble recession. It's easy to imagine gas pass $4 per gallon and having the nation plunge back into recession. To somebody like Friedman, who floats above the working world in his hybrid SUV, there are no such worries - his concern appears to be that $4 per gallon is too little.
The smart thing for us to do right now is to impose a $1-a-gallon gasoline tax, to be phased in at 5 cents a month beginning in 2012, with all the money going to pay down the deficit. Legislating a higher energy price today that takes effect in the future, notes the Princeton economist Alan Blinder, would trigger a shift in buying and investment well before the tax kicks in. With one little gasoline tax, we can make ourselves more economically and strategically secure, help sell more Chevy Volts and free ourselves to openly push for democratic values in the Middle East without worrying anymore that it will harm our oil interests. Yes, it will mean higher gas prices, but prices are going up anyway, folks. Let’s capture some it for ourselves.
I'm not sure how we would be capturing "some of" the windfall profits heading to the Middle East by having a $1 per gallon gas tax, but it's easy to see how such a tax, implemented now, would create incredible financial hardship in what, to Friedman, seems to be economic flyover country. I wish Friedman had linked to what Blinder actually wrote, so I would know if he's making an appeal to authority that isn't based upon what Blinder actually wrote, or if we're dealing with some sort of metaphorical case of the Blinder leading the blind. (And what happened to poor Michael Mandelbaum, his authority of days gone by?)

It's not that, were we to roll back the clock to the time when Friedman first proposed an incremental gas tax, it would be a bad thing. It's that there's such a thing as timing, and... let's face it, back when the economy was stronger he proposed (a smaller tax with) a larger vision:
I know it is a stretch - that the president announced tomorrow that he wanted an immediate 50-cents-a-gallon gasoline tax - the "American Renewal Tax," to be used to rebuild New Orleans, pay down the deficit, fund tax breaks for Americans to convert their cars to hybrid technology or biofuels, fund a Manhattan Project to develop alternatives for energy independence, and subsidize mass transit systems for our major cities.
Now it's just implement a regressive tax to "pay down the deficit"? I recognize that this idea has no political legs, which is perhaps why Friedman feels such liberty to keep raising it, but if we're working in the realm of fantasy why be so limited in imagining how the newly raised tax dollars will be spent?

Tuesday, February 22, 2011

Of All the Appalling Things....

I have to agree with Thomas E. Waits on this one:
A friend recently asked me what I really had learned since 9/11, how my sense of the world had changed. That event and its consequences have so dominated my life for the last 10 years that it took me a minute to consider, and I was surprised at my response. I told him that I never expected to live in a country whose government officially embraced torture....

Torture and other abuse of people under American control was more than a crime; it was a strategic blunder: You can't win a war by undermining your own values, the things your country stands for.

Monday, February 21, 2011

You Didn't Expect Him To Keep His Promises?

Governor Rick Snyder ran for office on a platform of offering a massive tax cut to Michigan businesses while otherwise slashing government spending in order to balance the state's budget, which faced a massive shortfall even before business tax reform. And now he's doing what he promised. Is the surprise that a politician is keeping his promises?

I was discussing Snyder after the recent election with somebody who was concerned about the Republican monopoly on the state's three branches of government. I argued that the Republicans have no impediments to implementing their reforms and thus can be fairly judged by whether or note the reforms they promise will turn around the state's persistent downward slide in fact work. If they bring about disaster for the state, at least in theory they should face disaster in the next election. The reply, "But what if they succeed?" Well, it's hard to argue with success.


Right now a lot of people are upset about Snyder's proposed budget. You see, it turns out that when you have a massive budget deficit, add a major tax cut to the mix and rule out any tax increases... except for senior citizens who receive pensions (they're probably icky people anyway, like retired union workers, teachers and public employees)... you have to do a lot of cutting. And people who believed that they were immune from budget cuts because it's only other people who benefit from government spending are finding out, in a hurry, that they in fact did receive benefit.

If Snyder's business tax cuts inspire more businesses to locate in Michigan or help existing businesses grow, that would be good news for the state. One of the things that has been lost in the avalanche of analysis over the federal deficit is how much of the deficit is attributable to the recession. How much better off we would be if and when the economy rebounds, and how much better it is to close a budget gap through growth than through cuts - how ill-considered cuts can actually worsen the employment situation and prolong a recession.

But if that business income doesn't start pouring into Michigan, I'm not sure that low corporate taxes will do much for the state. If you slash spending on education, while school districts remain hampered in their ability to raise money through local taxes, you will see deterioration of schools: physical deterioration, a narrowed curriculum and a greater difficulty finding and retaining teachers. If you cut state support for colleges, you'll see similar things happen in higher education - and Michigan, which already bleeds talent to other states, will see more of its capable high school seniors leave the state before college as opposed to after graduating. Large businesses looking to enter a state can be expected to consider if the state will be attractive to employees. Many employees will tolerate a Michigan winter, but how many will also tolerate crappy schools? Despite a substantially higher cost of living, how many businesses will choose to locate in Snyder's hometown of Ann Arbor, as opposed to, let's say, Willow Run schools? Similarly, what of road conditions, availability of skilled workers, public spaces and cultural opportunities?

Snyder also claims to want an even playing field. That's how he justifies the proposal for taxing pensions - to quote Snyder's Chief of Staff, "A young, unmarried mother of two gets taxed on her earnings. Why should any other group be exempted?" The same "fairness"1 logic, apparently, is being used to justify cutting tax credits for the film industry. Why should the state issue tax credits that favor one type of business over another? All business are created equal, right?

Except, of course, some businesses aren't like the others. A film production company may look more ore less like any other company, but each film it produces is a creature unto itself. I read an interview with a producer who made a joke to the effect that every script he reads "Fade in: A tax incentive state." Because that's the number one consideration when choosing where to shoot a film. It may not be "fair" but as a businessman Snyder should be fully aware by now that, even though it's been very good to him, life isn't fair. Film productions are like tourists, and if two hotels look pretty much the same they're going to pick the one that costs less.

Snyder shouldn't attempt to be cagey about it - he should be prepared to admit, flat-out, that he knows his budget proposal is likely to kill Michigan's film industry. I personally don't want to hear that we have to kill a nascent industry because it's "unfair" that the state is subsidizing its development. I want to hear the cost-benefit analysis of how a mature film industry will benefit the state, or how due to high subsidies the state will be better off even if it throws away the jobs and spending associated with film productions.

Snyder has the idea that tax credits should be replaced with "incentive grants" that can be evaluated on a year-to-year basis, and in many ways such an approach is superior to making optimistic projections about tax credits in order to get them into the budget with little subsequent regard for whether they work. But conventional brick-and-mortar businesses aren't simply looking at the coming year, and transient businesses like major film productions aren't likely to be choosing a shooting location at the last minute, so that approach can actually create considerable uncertainty. Besides, whether you offer tax credits or "incentive grants", you won't be offering them to every business so the "playing field" remains unequal. From a bean counting perspective this may make sense, and perhaps some inefficient grants will be ended as a result of annual review, but from any other perspective the proposed policy seems as bad as or worse than the status quo.

As I initially suggested, though, this is what Snyder promised. Nobody who voted for him should be complaining about getting exactly what they ordered. The shame is that we don't have a time machine, as I suspect the better time for Snyder to have been governor would have been during Engler's years, when the state was put on the receiving end of tax "reforms" that helped lock in place its ongoing decline. I don't know that Snyder would have done better, but if there is something to this "put a businessman in charge" thing, we at least had some room to play around with the budget without wreaking havoc.

1. Seriously, fairness? When did Snyder become a Democrat?

Monday, February 14, 2011

The Affordability of High Speed Rail

As you probably know, Robert Samuelson comes from the "If I favor something, we can safely assume that its cost will be 'pocket change'" school of economics. And although he has since admitted that he grossly underestimated the cost of the Iraq war, he has not backed away from his definition of what constitutes "pocket change" - the type of expenditure our nation is rich enough to make without any serious reflection about costs. In terms of discretionary spending:
People inevitably ask that question, forgetting that the United States has become so wealthy it can wage war almost with pocket change. A war with Iraq would probably cost less than 1 percent of national income (gross domestic product).
So we can spend amounts of up to, say, $140 billion per year and dismiss the expenditure as "It's only pocket change". In terms of recurring spending:
[The defense budget] now runs about $350 billion annually. That's a lot of money but, in an economy producing more than $10 trillion annually, isn't much of a burden. It's slightly more than 3 percent of GDP.
So we're now talking "$500 billion per year isn't much of a burden". Except, of course, if we're talking about Medicare or Social Security in which case a comparable sum magically becomes an unsustainable burden.

I'm not thrilled with Samuelson's formulation as it seems to be too easy a dodge - you break down the spending you support into small chunks, with self-interested projections about future costs, while aggregating the costs you oppose, such that your agenda can be paid for with "pocket change" and everything else is "unaffordable." If you have $1, a penny may be "pocket change" but that doesn't mean you have more than 100 pennies to spend - you still have to do the math and set priorities.

If we give Samuelson the benefit of the doubt, we can acknowledge that when he made his "pocket change" argument he argued that, as affordability was not a valid issue, the next step should be to examine whether we should "afford" something. But when Samuelson doesn't support an expenditure he consistently rejects his own "pocket change" formulation in favor of the lament, "It costs too much". The latest case in point, high speed rail.
Vice President Biden, an avowed friend of good government, is giving it a bad name. With great fanfare, he went to Philadelphia last week to announce that the Obama administration proposes spending $53 billion over six years to construct a "national high-speed rail system." Translation: The administration would pay states $53 billion to build rail networks that would then lose money - lots - thereby aggravating the budget squeezes of the states or federal government, depending on which covered the deficits.
Strangely, I'm having a difficult time understanding why Samuelson sees $140 billion (<1% of GDP) as "pocket change" that trumps the "can we afford it" argument, but $9 billion is an astronomical, unaffordable sum.
High-speed rail would definitely be big. Transportation Secretary Ray LaHood has estimated the administration's ultimate goal - bringing high-speed rail to 80 percent of the population - could cost $500 billion over 25 years.
So in Samuelson's "worst case scenario" with 80% of the population ultimately served by high speed rail lines, an initial infrastructure investment of $20 billion per year is a "stupendous sum". The point is, thanks to his "we can afford it" argument in relation to the Iraq War and all things military, Samuelson's "we can't afford it" argument about high speed rail is... a train wreck. In his present argument he rails about costs because he opposes the program and his policy arguments are weak; in the former argument he spoke of our nation's wealth and of much larger expenditures as "pocket change" because he supported the program and similarly could not compose a compelling policy argument.

Samuelson's policy argument rests upon a broad range of assumptions: First, he presents an anecdote about an opponent of rail transportation from the Cato institute who found that bus travel from DC to New York City was considerably cheaper than rail. Never mind if that's the fair comparison at present - is the train cheaper, for example, than air travel?

Second, he assumes that high speed rail is going to be the equivalent of low speed rail, such that people choosing between rail and other forms of travel won't consider the speed and convenience of high speed service. I suggest that he travel from London to Paris by three methods, car (and ferry or hovercraft), air and high speed rail, then get back to us on which was the most convenient. Samuelson argues that air travel is presently "quicker" than trains; perhaps he has forgotten that we're talking about "high speed rail"?

Third, he assumes that oil prices will remain low. I'm not sure what date Samuelson would accept as the date for "peak oil", but it's more than safe to assume that the cost of bus travel and air travel will rise. Samuelson may not be aware of this fact, but once you build a railroad and buy the trains and cars it's a relatively cheap way to get people or freight across long distances. You don't see trucks hauling coal from mines to the nation's coal-burning power plants - it's sent by train.

Fourth, Samuelson appears to believe that the nation's interstate highway system is free. That it doesn't require massive, annual investment. That we don't need to invest hundreds of billions of dollars in roads and bridges just to maintain the status quo. That a growing population will find a cross-country drive as pleasant as he did, back in the dawn of the era of the interstate highway, rather than as a congested drive across potholed roads and crumbling bridges.

When I was planning my last cross-country trip, I looked at rail travel. I quickly dismissed it as a possibility. Why? Because unless your goal is to spend a good chunk of your vacation admiring the landscape (or cityscape) through a train window, it eats too much time to travel by train. There are issues even in a short-term trip, such as from Ann Arbor to Chicago, due to the number of stops the train must make at small town stations, the many stretches of urban track for which the speed limit is low, and the periodic stops to allow freight trains to pass - freight carriers own the tracks and they get priority. I would hope that a high speed rail system didn't follow a similar "stop in every town" model, as frequent stops would significantly reduce the benefit of "high speed".

It's also not much fun to be on a train full of people who constantly chatter on cell phones or leave their cell phones on while sleeping through phone calls and voice mail alerts that come through every five or so minutes. The comfort level of the cars and seating was suboptimal - not that air travel is great, but the incremental cost for offering more space and better seats is much lower for rail travel. But I didn't even consider bus travel. I suspect that, while he might not admit it, were Sameulson to travel across the country by Greyhound he would recognize why most people who can afford an alternative eschew long-distance bus trips despite the price point. Perhaps he could simply stop by a few bus stations and absorb the ambiance. Seriously, are you left with the same impression as me - that the extent of Samuelson's experience with mass transit bus and rail travel is reading the anecdote of the guy from Cato - that for Samuelson, a limo to the airport then flying coach would be "slumming it"?

I'll admit having some skepticism of high speed rail, not so much in theory but in practice. I am skeptical that the planners will avoid having the train stop every fifteen minutes, doubling or tripling the duration of a "high speed" trip between more significant population centers. I'm skeptical that the companies that run high speed trains will invest in the level of moderate to high comfort you can enjoy in many other nations. I'm skeptical that governments will provide for the construction of relatively direct rail lines between population centers. I would like to see a solid plan in place before spending is authorized.

But with rising fuel prices, by the end of the next quarter century (assuming he's still alive) even Samuelson might be troubled by the cost of air travel. So rather that presenting "we can't afford it" arguments that he would probably reject out-of-hand if we were talking about, say, invading Iran, perhaps Samuelson can do us the favor of looking at the facts.

Missing the Boat on EMTALA

Timothy Sandefur recently attacked Professor Akhil Amar's position on the individual mandate. Amar wrote,
When uninsured Connecticut residents fall sick on holiday in California and get free emergency room services, California taxpayers, California hospitals and California insurance policyholders foot the bill. This is an interstate issue, and Congress has power to regulate it....

There is nothing improper in the means that Obamacare deploys. Laws may properly regulate both actions and inactions, and in any event, Obamacare does not regulate pure inaction. It regulates freeloading. Breathing is an action, and so is going to an emergency room on taxpayers' nickel when you have trouble breathing.
Sandefur complains,
Nor is Amar’s reference to emergency rooms relevant. Obamacare has nothing whatsoever to do with this. Emergency room free-riding is a problem,* but emergency rooms are paid for by tax dollars.
That, of course, is not accurate. While tax dollars may pay for part of that care, another part is passed on to paying patients (and their insurance companies) and another part goes unpaid or is classified as "charity care". If hospitals and doctors were fully funded under EMTALA, we wouldn't see hospitals close their emergency departments or choose not to open one for fear of being stuck with the cost of treating uninsured patients. Why would EMTALA, with its harsh penalties and potential for massive civil liability, be required if hospitals and doctors were fully compensated? And overloaded emergency rooms are in what one doctor calls "the fog of war", utilizing costly tests to make up for their lack of patient histories and lack of time to make detailed physical examinations and diagnoses.

Sandefur updated his post with an argument that suggests that we could overcome the problem of free riding at emergency rooms, if only we repeal EMTALA:
Emergency room free-riding is a problem that, like the Obamacare free-rider problem, is caused by federal law, which forces emergency rooms to treat all comers without regard to their ability to pay. But unlike with Obamacare, the emergency room free-rider problem is addressed by funding emergency rooms with tax dollars, not by any compelled purchases.
As previously stated, emergency rooms and doctors do not receive full compensation for care provided under EMTALA. Beyond that the argument that the problem lies not with the uninsured, but with a mandate that emergency rooms treat the uninsured, is a fair one for a libertarian to make. But let's be honest - EMTALA is not going to be repealed. There's not a whisper of movement in the Republican Party toward its repeal and the "good old days" when a pregnant woman or heart attack victim could die in an ambulance looking for a hospital that would open its doors to an uninsured patient. And for all the talk about mandates and penalties, as I've previously suggested, the severe penalties that can be imposed against an on-call E.R. physician who declines to treat an uninsured patient under EMTALA look like the individual mandate on steroids.

Sandefur's addendum then drifts away from EMTALA, concluding,
As Charles Lane observed a few days ago, “Single-payer -- and any reduction in liberty it might entail -- would be clearly authorized under Congress’s power to raise revenue and spend it on the general welfare (Article 1, Sec. 8).... [T]he threat to liberty, if any, comes not so much from the individual mandate itself, but from the other things Congress might do if it gets away with claiming authority for this measure under the commerce clause.”
The slippery slope. The same argument, of course, applies to Congress's power to regulate what Sandefur would concede to be economic activity - we've been having that debate since Wickard v Filburn. Also, that's a policy argument, not one premised upon legal precedent or the language of the Constitution.

Sunday, February 13, 2011

What's Wrong With Higher Education

I have a lot of sympathy for the arguments raised in this editorial by a recent Oxbridge1 graduate:
Far too many young people are wasting precious years in a university system taken hostage by the cult of egalitarianism, when in fact they could be doing something useful with their brains. In so doing, they are draining increasingly scarce resources from those who genuinely should be in the academy. And the effect of targets such as that set by New Labour – 50 per cent of students to enter higher education – has been to push ever-more young people down a dead-end route, while stigmatising other wholly legitimate routes into employment, such as apprenticeships.

It necessarily follows that the wrong sort of people are going to university, and that the whole purpose of university has been bastardised to accommodate them. That line of argument doesn't go down well in metropolitan circles. Yet the failure to say it is causing a social catastrophe, and although it is the very height of political incorrectness to express it, the case for a drastic reduction in university numbers has to be made clear.

What is that case? The first half is practical. Although most middle-class parents are loath to admit it, for a growing number of undergraduates, university is a phenomenally expensive waste of time. Unless their parents are upper-middle class, the average student can expect to come out of university with a debt of £27,000. That is disregarding, of course, the earnings that they might have made in those years when they were rolling spliffs and pursuing freshers in the student union. Even if they didn't earn the national median income of £26,000, had they worked for three years they might still have earned a solid, say, £45,000. Add that to the £27,000 debt, and you're talking about a big investment.
The editorial does a good job of exploring how a shift from universities as a source of gains that cannot be quantified in economic turns to the concept of higher education translating into higher incomes, and thus creating the idea that there should be a return on your tuition 'investment', has distorted higher education and expanded the student population of "immature adults who want to delay their entry into the world of adult responsibility, either because they are lazy or because they are scared of it".
We have gone from a system founded on the principle that university is for the brightest, regardless of background, to one in which university is for all, regardless of ability.

This means that, each year, thousands of non-academic students are packed off to do three or four years of... nothing much.
The author falls into the trap of "the degree has a funny name, so it can't be serious", singling out the boutique study of "pig enterprise management" as an example of a non-serious degree. Those highly specialized degrees can sometimes be considerably more rigorous, and considerably more marketable, than a more conventional degree. It seems to me like the degree you would pursue because you intend to actually manage a pig farm, without much appeal to anybody who lacked either the inclination to or prospect for obtaining such a position.

As university costs rise, and alternative approaches to obtaining job skills are discounted in the popular consciousness, you can worsen the social inequality that you're trying to remedy:
The conflation of schooling and skilling, so aggressively promoted in the past two decades, is unforgivable, because it pushes skills on the poor while preserving schools for the rich. But universities cannot remedy that more foundational problem. And it's the poor who have most to lose from three years spent acquiring debt for a degree they don't need and won't use. It's the poor against whom the biggest fraud is being perpetrated: told that a degree course from a university will help to emancipate them from poverty, they are finding in ever-increasing numbers that said degree is leaving them trapped in it.
With the manner of funding offered in the U.S., we have created a system of schools (including low-quality, for-profit institutions) that offer very little for the money. And yes, a lot of students graduate with a solid grounding in a field in which there is no direct market - it's graduate school, or finding a job outside of their college focus. That's fine, if you can afford the luxury. It's not fine if you end up defaulting on student loans, passing the cost of your education onto the taxpayer while being indefinitely dogged by bill collectors over guaranteed student loans that have no statute of limitations and cannot be discharged in bankruptcy.

The fact that most people cannot discharge their student loans in bankruptcy should tell you something about the value of a college degree. If the experience of default were rare, or the amount of money small, Congress would not have felt the need to preempt state statutes of limitations for enforcement of federally backed student loans and make student loans largely nondischargeablhe. We can look at ways to diminish the distortion, and to shift the cost of default onto those who accept students unsuited to their programs or offer worthless degrees. We can also do a better job making clear what a college degree (and what specific college degrees) can and cannot do, and encourage students to also consider trade schools, community colleges, apprenticeships, or other methods of entering the workforce without the time and money required by a traditional four-year degree.

If I haven't convinced you, Paul Krugman offers some sobering statistics:
Here’s the question: of college graduates with a bachelor’s degree who aren’t enrolled in further schooling, how many have full-time jobs?

In December 2007, on the eve of recession, the answer was 83 percent.

By December 2009, it was down to 72 percent.

As of December 2010, it had recovered only slightly, to 74 percent.
Even when times are good, for close to one in five college graduates they're not so good.
1. As I've used that term twice in the past day, perhaps I should define it. "Oxbridge" refers to the most elite institutions of higher learning; and in the most narrow definition, to Oxford and Cambridge.

Educational Performance, Culture and Poverty

It is difficult to dispute that there is a consistent, international correlation between poverty and reduced educational performance. There's plenty of data to support a causative effect - impoverished parents are less likely to have previously achieved academic success, even to the point of obtaining a high school diploma. The small children of impoverished families are, by comparison to middle and upper class families, much more likely to be intellectually understimulated and to have much smaller vocabularies. I have some sympathy for this argument:
The biggest barrier to educational achievement today is not any of the things the media talk endlessly about: poorly prepared teachers, badly run schools, too many tests, low standards. It’s child poverty—which, like poverty in general, has just dropped out of the discourse.
But what does that mean? You'll probably get very different answers from Al Sharpton and Bill Cosby. But I don't believe that you have to point your finger at the poor to identify the problem: On the whole, our nation isn't particularly serious about educational achievement.

During the years followingWorld War II, the U.K. poured money into a system of grammar schools, channeling kids deemed to have strong academic potential into strict, academically focused schools based upon tests administered at age 11. This system was not perfect - it channeled a lot of kids who would have fared well on an academic track into a vocational track, and it pushed a lot of kids from working class families into academic programs that weren't necessarily a good fit. But that's how you ended up with working class kids from Cumbria getting Oxbridge Ph.D.'s, despite their parents' relatively low educational background and income. But you would be hard pressed to find among the parents the same sort of cavalier attitude toward education that exists not just among "the poor", but across much of modern society. When parents perceive education as a way out of poverty, and push their kids to succeed to the best of their ability, they diminish the impact of their own lack of means or educational achievement.

Writing for The Atlantic, Amanda Ripley has attempted to demonstrate that our nation's problem with education runs deeper than poverty:
We’ve known for some time how this story ends nationwide: only 6 percent of U.S. students perform at the advanced-proficiency level in math, a share that lags behind kids in some 30 other countries, from the United Kingdom to Taiwan. But what happens when we break down the results? Do any individual U.S. states wind up near the top?

Incredibly, no. Even if we treat each state as its own country, not a single one makes it into the top dozen contenders on the list. The best performer is Massachusetts, ringing in at No. 17. Minnesota also makes it into the upper-middle tier, followed by Vermont, New Jersey, and Washington. And down it goes from there, all the way to Mississippi, whose students—by this measure at least—might as well be attending school in Thailand or Serbia.

* * *

How would our states do if we looked just at the white kids performing at high levels—kids who are not, generally speaking, subject to language barriers or racial discrimination? Or if we looked just at kids with at least one college-educated parent?

As it turned out, even these relatively privileged students do not compete favorably with average students in other well-off countries. On a percentage basis, New York state has fewer high performers among white kids than Poland has among kids overall. In Illinois, the percentage of kids with a college-educated parent who are highly skilled at math is lower than the percentage of such kids among all students in Iceland, France, Estonia, and Sweden.
Seriously, we live in a nation in which parents are horrified by the idea that their kids might be held back a year in school due to their inability to keep up with their peers in class, but in which large swaths of the population will happily withhold their kids from school for a year so as to give them an advantage in size and coordination by the time they are participating in high school sports. If you're looking at academics, high schools are not high pressure environments for academically capable kids - but a high school culture that's focused on sports and social events can be extremely awkward for a kid denounced as a "geek", "nerd" or "egghead". It can be socially awkward to consistently know the correct answers when called in in class. And as we've encouraged more and more kids to go to college, that culture has percolated up into undergraduate programs.

Ripley's article suggests that our "smart kids can take care of themselves" attitude, academic rigor doesn't really matter because the best students can figure things out for themselves, is misplaced. Smart kids here do okay, but they do better in other nations. Is that "the end of the world"? Of course not. Many of those kids will go on to college, find their groove, and more than make up for the lack of rigor they experienced in high school. And college is not a magic bullet - there are plenty of successful people who dropped out of college or didn't attend college. There's also a balance to be reached between the type of "teach to the test" environment being forced on inner city schools (and to a significant degree on schools outside of the inner cities) and a flexible learning environment that fosters intellectual creativity and growth. U.S. graduates, whatever their faults, have done well in business and industry as compared to top performers from academically rigid schools in other nations.

But, apologies for the cliché, the world is changing. (It's always changing, and it always will continue to change.) I'm not sure that we have the luxury to allow high school and, increasingly, four year colleges continue to be a place to socialize and "find yourself". Fundamentally, they're supposed to be academic institutions. Even to the extent that many parents are content to revel in their children's performance on a sports team or enjoy the vicarious thrill of their child's popularity, I think schools owe serious students a better opportunity for serious study.

When we talk about the poor, we often speak in patronizing tones about "role models", and often as if Dennis Rodman's latest relapse will cause the average inner city teen to give up on his academic dreams. But the role models that make the most difference in a child's life aren't celebrities, and to the extent that celebrities are role models they should largely be relegated to the fantasy world. The most important role models are the adults that children encounter on a daily basis, starting with their own parents. No celebrity lecture on "the importance of education" is going to resonate as much as the same conviction, heard and felt on a daily basis, from your parents and community. It's perfectly fair for middle class America to say to much of the inner city, "Education is the best way out of poverty, so you should take education more seriously." But it's also perfectly fair to say that the failure to take education seriously is also an issue in many middle and upper class homes and schools.

Saturday, February 12, 2011

The Trouble With Pensions....

The League of Ordinary Gentlemen has had, in recent weeks, a number of thought-provoking posts on unions. If you're looking for something to agree with or to disagree with, if you review the posts odds are you'll find the opportunity to do both. (See, for example, "Public sector unions bad, private sector unions sort of good.")

E.D. Kain asks, in the context of the debate over pensions, whether the focus should be less on the idea that union members get too much and more on whether the real issue is that non-unionized workers are underpaid.
Nobody but public sector employees receive pensions anymore. And maybe this is an argument to move back to the pension model rather than an argument to get rid of public pensions. Maybe leveling the playing field is the right idea, but we should level it up rather than level it down.
I personally wouldn't mind having a pension (or more than one, if I could swing it) instead of being responsible for my own retirement. And yes, there are careers in the public sector for which workers of a certain age become less suited to the job. There's also an argument I've heard made that with the rate of job turnover, some government units can save money by having a defined benefit plan - provided it takes five or more years to vest. But....

In the argument about the negative side of public sector unions, Kain adopts the position that union members could collaborate to have union-friendly people elected to office and that those people might participate or influence future union negotiations. Not necessary. When managers negotiate union contracts, whether in the public or private sector, they almost inevitably give themselves equal or greater benefits. It's not fair, after all, if the union members get three days of bereavement leave and managers only get two - managers should have five. And it's not fair that a union member might be able to retire in twenty years with a vested pension unless....

I disagree with the idea that similar things don't happen in the private sector, although I'll concede that it's easier for private companies to avoid unionization, avoid their union contracts through bankruptcy, and that the directive is likely to come down from on high that concessions to unions aren't to affect the value of management's stock options. If you think that UAW workers were overpaid prior to the GM bankruptcy, did you happen to notice executive compensation and perks? Did you happen to notice that the government bent over backwards to keep the financial industry and AIG out of bankruptcy, with full, excessive compensation delivered out of taxpayer pockets and into those of the people who broke the financial system? It's not as if management suffers - just like public sector managers, the managers of publicly traded companies are happily spending other people's money, and are much more free to lavish it upon themselves.

Also, while vesting periods can potentially save money at one end (at the expense of a shorter-term worker) they cost money at the other end - people who stay a few years longer than they should in order to get their 'full' pension, or who get a last-minute promotion that significantly raises their retirement benefit. And the nightmares that can result when there's an attempt to reduce the workforce, with buyout packages, early awards of pension benefits, etc. - often with parity requirements such that you have to offer the same opportunity for a buyout or 'early retirement' to the people in other departments.

So, pensions? No, I would switch over to a defined contribution plan. The union can negotiate for a greater matching contribution. There's no future liability to government. Workers know exactly how much they have in their retirement accounts. Management services can be offered through companies with strong track records, such as TIAA/CREF. And no, people aren't as happy as they would be if they retired with a generous pension, but on the whole we'll be better off.

Addendum: I would do something similar with retiree health benefits. Perhaps the employer and union could negotiate for an annual contribution by the employer to retiree benefits, which would then be transferred to, held in trust and managed by the union.

The Bush-Blair "Freedom Agenda"

Charles Krauthammer bloviates,
Today, everyone and his cousin supports the "freedom agenda." Of course, yesterday it was just George W. Bush, Tony Blair and a band of neocons with unusual hypnotic powers who dared challenge the received wisdom of Arab exceptionalism - the notion that Arabs, as opposed to East Asians, Latin Americans, Europeans and Africans, were uniquely allergic to democracy.
To the extent that Krauthammer is arguing that Tony Blair personifies the G.W. Bush "freedom agenda", and how it relates to Egypt, I agree completely.
Tony Blair has described Hosni Mubarak, the beleaguered Egyptian leader, as "immensely courageous and a force for good" and warned against a rush to elections that could bring the Muslim Brotherhood to power.

The former prime minister, now an envoy to the Israeli-Palestinian peace process, praised Mubarak over his role in the negotiations and said the west was right to back him despite his authoritarian regime because he had maintained peace with Israel.
Yes, when G.W., Tony Blair and their merry "band of neocons" stood for freedom they stood squarely behind people like Mubarak. And they stood in the way of Arab democracy not because they didn't believe it would be embraced, but because those pesky Arabs might have elected the wrong people.

And that pretty much sums up the rest of Krauthammer's column - the Arab world needs democracy, so for now we should prop up dictators and hope that they start creating the necessary institutions and opportunities such that elections can take place once the Arab world is no longer Islamic.

David Brooks' Math Problem

Like "everybody else", David Brooks wants to balance the budget.
The greatest pressure comes from entitlements. Spending on Medicare, Medicaid, Social Security and interest on the debt has now risen to 47 percent of the budget. In nine years, entitlements are estimated to consume 64 percent of the budget, according to the invaluable folks at the Committee for a Responsible Federal Budget. By 2030, they are projected consume 70 percent of the budget.

When you throw in other politically untouchable programs, like Veterans Affairs, you arrive at a situation in which a vast majority of the budget is off limits to politicians who are trying to control debt. All cuts must, therefore, be made in the tiny sliver of the budget where the most valuable programs reside and where the most important investments in our future are made.
Let's confront it at the outset: David Brooks is what some waggishly call a "very serious person" when it comes to balancing the budget, which means that he's not actually concerned with balancing the budget. Sure, he's worried about potential future growth in entitlements, and we do need to address that growth. But his seriousness begins and ends with "How do we cut entitlements". Not, "How do we reform entitlements to make them sustainable," or "How can we get the same benefits while spending less money." Nope, you do it his way or you get a dismissive sneer about how you're putting the "vast majority of the budget... off limits".

It's easy to find Republican commentators who complain, with reason, that Medicare and Medicaid are unsustainable and we must find a way to bring their cost growth under control. They're right. So let's look around the world, right now, at what other developed nations are doing. Are there any that spend as much as we do for health care? Are there others that get better outcomes? How about emulating them? Nope, not even a possibility. Not even if it will help control the cost curve and balance the budget.

It's a fair retort that other nations haven't achieved perfection. They may get similar or even better outcomes at much lower costs, but their medical cost growth curves (even if lower) are also unsustainable. But that's neither a valid basis to reject their approaches, nor to examine those elements that work and adapt them to the U.S. system. At least if the goal is to balance the budget. If you're willing to blow a huge hole in the deficit and allow out-of-control medical inflation due to your love of our pseudo-free market system, fair enough. But if so, why should anybody regard you as serious about balancing the budget. Your "my way or the highway" approach is every bit as obstructionist as that of your imaginary foe who won't agree to cut even a penny from Medicare.

As for Medicaid? Untouchable? Brooks can't be serious.

Social Security is not a pressing issue. It's budget is balanced well into the future. If you believe that the U.S. will be in such a bad position by then that it is going to start defaulting on its debts, well, what can I say? If that's our future, getting a Social Security check will be among the last things you'll be worried about. It's possible to balance Social Security for additional decades with relatively minor adjustments, but that will only have people like Brooks sounding the alarm about the next date after which Social Security is projected to be unable to pay full benefits.

I am perfectly content to talk about Social Security reforms and the impact of an aging population. People in Brooks' camp? They talk about privatizing Social Security, then they check the polls and find out that "privatizing" is not polling well so they start talking "personal accounts" (which must be selected from a narrow range of government-defined options, from which private managers will skim management fees, and for which there is no guaranteed return) while simultaneously complaining that it's unfair to speak of their plan as "privatization". Beyond that, what is Brooks offering? How... serious.

Brooks lectures the Republican Party that they have to do more than talk and dream about cutting entitlements - it's time to turn those dreams into reality:
Over the next few weeks, Republicans will try to cut discretionary spending to 2008 levels and tell their constituents they are boldly reducing the size of government. That is a mirage. Anybody who doesn’t take on entitlement spending is an enabler of big government.
Yes, the Republican budget plan is a joke. Has been a joke. Will be a joke. But wait a minute here. What word is completely absent from Brooks' editorial on how to be serious about the budget. He's mentioned interest, Social Security, Medicare, Medicaid, veteran's benefits.... That's right, in an editorial oddly titled "The Freedom Alliance",1 he has forgotten about that pesky military budget.

If Brooks wants to make a policy argument about why the military budget should be untouchable, he's free to do so. The New York Times would pay him for that column, as it does with any other. But as with the argument he doesn't make as to how we could save billions, right now, by adopting a different approach to health care spending, he has no discernible interest in the subject. He'll complain that Teach for America's $18 million earmark is at risk, but forget about paying for it by pulling 40 or so combat soldiers out of Afghanistan.

Note another concept missing from Brooks' analysis: the tax increase. He's sort of a twisted Marie Antoinette. "Hey you - you want some cake? You can eat cake. You just have to take it away from veterans, sick people and old people." Buy more cake? You gotta be kidding, right? Once again he could offer a policy argument - why the rich, who are richer than ever, should not pay more taxes. But nope. Instead he's championing the recommendations of the failed Simpson-Bowles deficit commission and telling us that if we want barely trained college grads teaching our kids, grandma's gotta give up her medicine.
1. This "Freedom Alliance" apparently involves various groups that want government money teaming up to convince the masses that our freedom is at stake if we don't convince Congress to cut entitlement spending in favor of perpetuating their earmarks. Go grass roots!

Fear of Disbarment

Atrios writes,
I've mentioned this before, but my new pet peeve is the regular plot in lawyer and doctor shows in which a relatively minor ethical transgressions cause everyone to panic about likely disbarment/license losing. If these were real concerns, things like this would not happen.
The fastest way to get suspended or disbarred is to get caught stealing from clients, and the second fastest is to neglect client matters and lie to clients about the status of their cases. If you're with a large firm, the firm should have protocols in place to help identify and prevent that type of problem, so if you're caught pilfering funds it's most likely from the firm as opposed to the firm's accounts and, at least in theory, somebody else in the firm can step in when your drug or alcohol problem (the most likely causes of the neglect of cases) gets out of control.

Beyond that, well... let me put it like this. The ethics rules are written to advantage large firms over small. And the system favors those who have the money and resources to keep fighting and fighting and fighting against ethics charges. I've seen small firm lawyers who are willing to do so put up an incredible fight against discipline and, despite having committed offenses far more egregious than those for which others voluntarily accept responsibility and are disciplined, manage to put off the consequence for years or get away with little to no consequence... beyond perhaps five to six figures in legal fees spent fighting the charges. But really, while the small firm practitioner really does have to sweat the small stuff, the rules likely to trip them up are often written or interpreted in a manner favorable to large firms.

Even something as simple as writing a client fee agreement is a potential hornet's nest. Way back when, I worked at a non-profit that collaborated with top practitioners to put together a manual that included instruction on how to draft a retainer agreement, and included a variety of sample agreements. A few years later an attorney with the state's Attorney Grievance Commission (AGC) was flipping through the book at a seminar and stated that any number of clauses weren't acceptable. This caused the book to be removed from the market. We could not get the attorney to agree to help us edit the agreements to be compliant with state ethics rules, nor to provide sample agreements that they deemed compliant.

So if you're a small firm lawyer trying to draft a contract with your client you cannot find a sample retainer agreement that you can be sure will be ethically proper, and even if you do the AGC has turned the rules into a moving target - they may change the interpretation of the rules such that your entirely proper retainer agreement suddenly includes an unethical provision. Please note, I'm not stating that this results from a rules change. This can result from an unpublished, internal change in the way the AGC interprets the rules.

Let's take an example from a few years back. You're a small firm lawyer. You can only handle a certain number of time-intensive cases. So you decide that you're going to charge an engagement fee to clients - a non-refundable fee for taking the case, in order to hold your time. But your clients are hard up for money, so you agree not to start charging them money until after working a certain number of hours on the case. The AGC decided that if the engagement fee is applied to attorney fees, it's a retainer and is thus refundable. Your choice as a small firm practitioner was to risk that the client would change his mind about litigation after you gave up business by sticking with a standard retainer agreement, give no credit for the engagement fee and, perhaps, charge a lower hourly fee, or perhaps negotiate a flat fee for part or all of the case. But working out an agreement that protected you while protecting your client from the fee games resulting from this rule interpretation? Unethical.

It doesn't hurt the large firms, of course, that the AGC's leadership typically comes out of the large firm environment. So large firms get sympathetic rule interpretation while small firms are treated as suspect, have to deal with a game of "hide the ethics ball", and are apt to make the "mistake" of taking early responsibility for their errors instead of fighting tooth-and-nail and getting a better outcome. But you know what? That's not much different from how the legal system, at large, functions... so perhaps its an object lesson for small firm lawyers.

Friday, February 11, 2011

"Have You Drugged Your Kid Today?"

I guess this is what happens when a teacher comes down on the wrong side of the war on... no, make that for drugs. The admonition, "Don't use Adderall or Ritalin" is for DARE officers to give, not teachers.

I have sympathy for parents and teachers dealing with ADHD, but it does seem that the "diagnostic criteria" have devolved in many parts of the country to a school official saying to a parent, "You should consider an ADHD medication," followed by a general practitioner saying, "Let's try this one".

The teacher fired over her bumper sticker worked at a high school. You'll please forgive me, but I think high school students should be regarded as sufficiently capable to participate in a debate over ADHD drugs. But I suspect that the real issue wasn't so much a fear of a loss of order within the school or students refusing to take medication at the nurse's office, so much as it was their parents taking umbrage or fearing having to justify to their kids why the teacher is wrong.

Thursday, February 10, 2011

Google Cash or Facebook "Stock"

What a bidding war:
Executives at both Facebook Inc. and Google Inc., among other companies, have held low-level talks with those at Twitter Inc. in recent months to explore the prospect of an acquisition of the messaging service, according to people familiar with the matter. The talks have so far gone nowhere, these people say.

But what's remarkable is the money that people familiar with the matter say frames the discussions with at least some potential suitors: an estimated valuation in the neighborhood of $8 billion to $10 billion.
I would take the cash.

Seriously, I understand why Google is willing to overpay for a company to gain a strong brand and advantage in the marketplace, particularly given its own faltering efforts to enter social networking, and I understand why Facebook would want to keep a significant potential competitor out of Google's hands, but until the Facebook IPO occurs its stock value is every bit as speculative as Twitter's - and it's very complicated to sell, even assuming that the terms of the sale don't require Twitter's investors to sit on the stock until after an IPO. So I would be grateful to Facebook for forcing Google into a bidding war, would sell to Google and, as they say, "Take the money and run."
Despite the high valuations, Twitter's executives and board are continuing to work on building a large, independent company. People familiar with the situation said the company believes it can grow into a $100 billion company.
Because you would expect them to be saying, "We hope we find a sucker to buy this place for vastly more than it's worth before it goes belly up?" Hey, guys, I think my company can grow into a $100 billion company as well. I'll let it go for a mere... let's say $5 billion. A bargain.

Monday, February 07, 2011

Fred Hiatt on Democracy Promotion

Apparently the U.S. has a great interest in advancing democracy, except when that would interfere with U.S. interests or bring the wrong party into power. In other words, it would seem, business as usual but the Obama Administration should abandon its foreign policy goals and assessments in favor of Hiatt's.

Sunday, February 06, 2011

The Health Insurance Mandate vs. The "Broccoli" Slippery Slope

Every time I hear somebody whine about how if you apply the slippery slope fallacy to the health care mandate, you'll end up in a world in which the government can make you buy broccoli, I'm left wondering... has our nation, or at least the portion of our nation that is receptive to that argument, become a nation of Homer Simpsons? "Ick. Broccoli. Me no like broccoli." We could make the same argument but make it about ice cream. "Marge will have to buy ice cream every time she goes to the store? The law is good." Yes, let's use an analogy that treats the American public like it's composed of six-year-old fussy eaters.

Greg Sargent explains that health care is not like broccoli:
Since [sickness or injury] will inevitably happen to everyone aside from those in perfect health who suffer sudden accidental death, it's inevitable that virtually all of us will participate in the health care market whether we have insurance or not. Those who do so belatedly without insurance will drive up prices for all of us. Therefore, the individual mandate constitutes the regulation of participation in commerce that is inevitable. Congress isn't compelling that participation. It's just establishing the terms of that participation by placing a check on a certain mode of participation that harms all of us.

Could this be used as a precedent for a future Congress to compel you to eat or buy broccoli or purchase any other product it fancies? It's hard to see how.
Nobody is arguing that states don't have the right to impose a health insurance mandate. We have a state in which a Republican government signed into legislation a health insurance mandate that remains in effect to this day. That state does not have a broccoli mandate, and there is no sign that it will be passing one. Ever.

Another mandate that exists without controversy at the state level? The mandate that you insure your car. Ah, you respond, but you don't have to buy a car. Well, I guess technically you don't have to buy groceries, either - you could start a farm, grow your own food, and completely avoid a "broccoli mandate". Not realistic in the modern world, you say? Something only a few people could actually do? Right. And for most people it's not realistic for them to participate in society without owning a car. But more to the point, if you've already conceded that states can impose health insurance mandates, the issue of whether or not you can choose not to own a car is beside the point - states have the power.

So why, if its uncontroversial for states to have the power to impose health insurance mandates, and if not one state in the entire history of this country has slid down the slippery slope to a "broccoli mandate" or anything like it, are we supposed to live in terror that President Obama is going to make us buy broccoli? Technically speaking, most (but not all) states created the auto insurance mandate and stopped there, and one also created a health insurance mandate and stopped there. The other exceptions make provisions that allow car owners to avoid buying insurance.

The fact that the power to impose a mandate of this nature has not previously been exercised by Congress may be much less an indication that Congress lacks the power to impose such a mandate, and much more a reflection of the fact that the circumstances that call for such a mandate are exceedingly rare, arising in circumstances when people who are uninsured can impose massive costs on other individuals or on the rest of society.

Here's something else to consider. There presently exists a federal law, the Emergency Medical Treatment and Active Labor Act (EMTALA) that requires hospitals with emergency rooms to admit and stabilize the condition of patients who present themselves for care, without regard for the patients' ability to pay. Prior to the passage of that law, patients were literally known to die in the parking lot, or in an ambulance that shuttled them from E.R. to E.R. looking for one that would admit them and provide care. If we're to be worried that the health insurance mandate requires you to pay money to a private company if you want to avoid a minor penalty, why aren't we concerned that the nation's emergency departments and their on-call physicians are required to transfer wealth to private individuals if they want to avoid significant consequences and potential civil liability to the patient. As applied to physicians on call, how is EMTALA less of an intrusion on personal freedoms than an insurance mandate? How can the Commerce Clause authorize that mandate while being simultaneously construed to exclude any possibility of an individual mandate to purchase insurance?

And, if we go back to the "broccoli" argument, why did Congress stop there? Why doesn't a law similar to EMTALA apply to broken down cars - the mechanic doesn't have to fix everything, but must at least restore a broken down vehicle to running condition without regard for a customer's ability to pay? Why don't gas stations have to give unfortunate drivers "just enough gas to get home"? Or, if you're hung up on broccoli, why doesn't a restaurant or grocery store have to give you free food if you claim to be hungry - but only enough to make your hunger go away. (In our Homer Simpson nation, that could be a lot of food.) The slippery slope, as applied by the broccoli theorists, should have us enjoying free "emergency" services and merchandise in any number of contexts, yet it hasn't happened - and won't.

If I need to again say it, I don't like the mandate approach and would prefer a simple payroll tax and associated health insurance tax credit. There is no need to take the approach of a mandate so, whatever you think of its constitutionality, most can agree that we could find a better approach that would render this entire discussion moot. But I find the "broccoli" slippery slope argument to be unconvincing, from every angle.

Dictum vs. Holding

Back when I started practice, I attended a seminar at which a judge described a common problem with briefs submitted by lawyers who came of age in the era of Lexis and WestLaw: They would punch keywords into the search box, hit enter, find language in cases that supported their arguments, then quite that language without bothering to determine if they were citing the holding of the case - the court's binding decision - or dictum, statements not directly bearing on the issue before the court and thus not binding.

So I find it interesting that a law professor is excited about a column by a reporter (who studied law at Yale) that references and quotes as its sole legal authority a quote taken from a legal opinion in which the judge, as dictum, quoted dictum. For goodness sake.

Please, all you law profs, stop bringing back this sort of memory of law school. Some things, I would prefer to forget.

Saturday, February 05, 2011

Economic Growth and Corporate Responsibilities

Jonathan Adler objects to the President's statement on business,
Supporting businesses with this kind of 21st century infrastructure and cutting-edge innovation is our responsibility. But businesses have a responsibility, too. If we make America the best place to do business, businesses should make their mark in America. They should set up shop here, and hire our workers, and pay decent wages, and invest in the future of this nation. That’s their obligation. And that’s the message I’ll be bringing to American business leaders at the Chamber of Commerce on Monday – that government and businesses have mutual responsibilities; and that if we fulfill these obligations together, it benefits us all. Our workers will succeed. Our nation will prosper. And America will win the future in this century just like we did in the last.
If the government fulfills its “obligation” to provide a favorable business climate, there’s no need to talk about “obligation,” as business will grow and hire as they pursue profit opportunities. There are arguments to be had over the extent to which businesses have responsibilities beyond their obligation to maximize shareholder value (e.g. social and environmental obligations), but the obligation to maximize shareholder value — and incentive to seek profit — is enough for economic growth.
Adler here completely misses the issue, which is that it's possible for most or all of that economic growth to occur outside of the United States. It's difficult to believe that this needs to be explained: It's possible for a U.S. business to focus on its overseas operations, with hiring and expansion occurring overseas, and most or all of the associated economic growth occurring overseas.

Friday, February 04, 2011

If Kids Eat it in a Commercial...

It must be nutritious, right? I mean, kids are eating it. In a commercial.
Who would have thought that if you take some type of nut butter and add sugar and chocolate, you would end up with, you know, candy. (To borrow another product's one-time tagline, "Candy? For breakfast? It's Reese's!") And if you taste Nutella, surprise - it tastes like candy.

As I recall, the commercial doesn't say "Nutella is healthy". Its statements are more along the lines of, "I use Nutella to get my kids to eat healthy food," and "I spread a little on all sorts of healthy things." It seems to me to be akin to touting cheese sauce as a way to get kids to eat broccoli.

Ah, childhood memories....

Thursday, February 03, 2011

We Should Shed Tears for Corrupt Dictators?

Pat Buchanan appears to believe so:
But what must Mubarak think of us?

He stood by us through the final Reagan decade of the Cold War. At George H.W. Bush’s request, he sent his soldiers to fight alongside ours against fellow Arabs in Desert Storm. He stayed faithful to a peace with Israel his people detested. He cooperated with George Bush II in some of the nastier business of the War on Terror.

A dictator, yes, but also our man in the Arab world. Yet a few hundred thousand demonstrators in Cairo’s streets caused us to abandon him.

In the last half-century, how many others who cast their lot with us have we abandoned as “corrupt and dictatorial” when they started to lose their grip? Ngo Dinh Diem, Gen. Thieu and Marshal Ky, Lon Nol, Chiang Kai-shek, Marcos, the Shah, Somoza, Pinochet — the list goes on.

When we needed them, they were hailed as America’s great friends. When they needed us, we abandoned them in the name of our rediscovered democratic values.
Buchanan was in the Nixon, Ford and Reagan Administrations, so he's in a position to tell us whether any of the dictators for whom he weeps ever came to the President with a question such as, "I want to create a legacy of bringing my people into enlightenment, creating an educated, free democratic society - can I count on your help?" My guess is that the answer is none. On the other hand, were we to count the times they might have approached a President with a question like, "I need help training my secret police to squelch dissent - can I count on your help?"...

As for Mubarak's cooperation with the U.S. and its principal goals in the region, yes, he did cooperate. But would Buchanan have us believe that no quid pro quo was involved? That even if Egypt were not receiving close to $2 billion per year in aid and participating in U.S. military training exercises, Mubarak would have been as cooperative - or would have cooperated with us at all?

Buchanan sees Mubarak as wanting a better legacy than fleeing his country in the face of popular protest. No doubt. But if that happens it won't be because of anything the United States did. As with the other dictators and tyrants on Buchanan's list, it will be because of the way he ran his country. What are Mubarak's accomplishments as leader of Egypt? If he's looking for a place in the history books, being deposed may in fact be the best way to keep himself from being a footnote between the Presidency of Anwar Sadat and that of his successor.

Mubarak could redeem himself and maintain power until a transition date of his own choosing, if he embraced the democratic process and started speaking about creating a safe context for elections in the fall. He could transform the tail end of his presidency into an interim government, bridging Egypt's undemocratic, dictatorial past with its (possible) more democratic and open future.

Also, if he has to turn tail and flee in the next few days it won't be because the U.S. hasn't tried to support him and to facilitate an orderly transition of government. It will be because, in lieu of making any substantive promise of or timetable for reform, he decided to try to put down the protests with violence. How is that anybody's fault but his own.

No, I don't want to say that U.S. policies don't play a role in this. As part of his quid pro quo with the United States, Mubarak helped sustain policies that were very unpopular with some, most, and perhaps at times all of his population. The U.S. government appreciated that type of loyalty to U.S. interests - but at the same time the government, most notably the administrations of Buchanan's past employers, were quick to withdraw support or attempt to oust allies of this stripe who weren't willing or able to demonstrate the required degree of loyalty. Mubarak might have had difficulty in a more open, democratic society, maintaining his nation's blockade of the Gaza Strip. But nobody said democracy was easy.

As for the rhetorical question, "what must Mubarak think of us," I guess it depends upon whether he knows his history. But in the greater scheme of things it doesn't matter. That's the part that's gotta hurt, right? That (albeit in large part due to his own choice and action) we see him as largely dispensable. That one of his biggest U.S. defenders categorizes him alongside Lon Nol and, implicitly, Manuel Noriega. (Should Saddam Hussein be on Buchanan's list?)

Wednesday, February 02, 2011

Opportunity Counts for Something

Yong Zhao offers an interesting take on international test scores:
So who has made America “the largest, most prosperous economy in the world?” Who are these most productive workers? Where did the people who created the successful companies come from? And who are these inventors that received the most patents in the world?

It has to be the same Americans who ranked bottom on the international tests. Those 12th graders with shameful bad math scores in the 1960s have been the primary work force in the US for the past 40 years. The equally poor performers on international tests in the 70s and 80s have been working for the past 30 years now. And even those poor performers on the 1995 TIMSS have entered the workforce. Apparently they have not driven the US into oblivion and ruined the country’s innovation record.

* * *

What America really needs is to capitalize on its traditional strengths—a broad definition of education, an education that respects individuality, tolerates deviation, celebrates diversity. America also needs to restore faith in its public education, respects teacher autonomy, and trusts local school leaders elected or selected by the people.

In addition, America needs to teach its children that globalization has tied all nations to a complex, interconnected, and interdependent chain of economic, political, and cultural interests. To succeed in the globalized world, our children need to develop a global perspective and the capacity to interact and work with different nations and cultures, the ability to market America innovations globally, and the ability to lead globalization in positive directions. That includes foreign languages and global studies.
I don't believe that we can take historic test performance as an indication that we don't need to worry about how well American students perform in science and math. Part of the reason for this nation's past success is that people in other nations lacked similar opportunities for success. And for part of that success story we can thank a lot of foreign born, often foreign-educated people for working for American companies, or immigrating and starting their own businesses. The modern world gives those people a lot more options.

I do think it's important to recognize what the U.S. education system can bring to the table, and how much we lose by turning public schools into test prep academies. But that's not to say we should accept mediocrity from potential high performers on the basis that, "It worked before," or that we should ignore the nation's failing schools on the basis that our workforce is "educated enough" to fulfill present STEM needs. It's worth something to have a public that, at large, is mathematically and scientifically literate.

I don't think the present reform efforts do enough at either end. No Child Left Behind is evolving into something that seems a lot like... No Child Left Behind. I don't think that Race to the Top is likely to make teachers any happier or make the profession more satisfying or more likely to attract and retain highly qualified professionals. The nationalization of school policy seems likely to stifle innovation and, sorry to say, most charter schools don't seem inclined to even try to innovate. The emphasis on raising the performance of the bottom of the class tends to shift resources away from the middle and, especially, the top. And the inclination of various prominent reformers to demonize teachers, and to tolerate anti-union fair weather allies who want to break teacher's unions and slash teacher pay and benefits, seems unlikely to improve either the quality of teachers in troubled schools or to encourage good teachers to remain.

One place we're not focusing enough is on colleges - how we might reinvent the college education to make it more cost-effective and to do a better job of preparing an entry level workforce for employers who increasingly want high productivity from day one.