Archie and the NRA

Back in the '70s, it must've been, Archie Bunker was a cultural icon. Played by Carroll O'Connor, a Hollywood journeyman who was, in fact, a leftie of the old school, Archie was the paterfamilias in a situation comedy in which the gimmick was his recurring arguments with his son-in-law. The son-in-law's name is lost, at least to me: Archie called him "meathead," because he was a classic liberal while Archie was an unreconstructed bigot at a time when that was still common enough to be funny.

The 70s were the heyday of airplane hijackings, the safe kind where the airplane actually landed, eventually. So hijacking was an issue; and Archie's solution, the subject of a vehement argument in one episode, was to "arm all your passengers." No hijacker would dare try anything if he knew that there were 100 or 200 guns on the plane.

Archie was played as satire; but it is worth noting that many viewers missed the satire and agreed with Archie, on this as on many other issues.

The President of the NRA, Wayne LaPierre, said today that the solution to "a bad guy with a gun is a good guy with a gun." Every school in the country, he said, should have an armed guard; and Congress should immediately appropriate the necessary funding.

So, let's see, here: according to the "Back 2 School Stats" from the National Center for Education Statistics, there are about 99,000 public schools in the U.S. To make the arithmetic easier, and noting that private schools are not included here, let's say one armed guard for each of 100,000 schools.  On one NPR broadcast today, I heard someone estimate a cost of $85,000 per armed guard, counting salary, benefits, equipment (the gun!), the entire training and supervision infrastructure.

So, that's $8.5 billion. Per year. Add private and parochial schools and we are clearly talking, say, $15 billion or so. But what the hey: spare no expense to protect our children.

But schools aren't chosen by wackos because of an animus against education; they're chosen because a reliably dense supply of people can be found there. Churches work, too; witness this year's shooting at a Sikh temple in suburban Milwaukee (the doofus thought the Siks were Moslems). So, while we're at it, we'd better protect the churches, mosques, temples, synagogues, meeting houses, and so on, too.

The Hartford Institute for Religion Research tells us that the best estimates say there are about 300,000 religious congregations in the U.S. Of course, most of those only have significant attendance once or twice a week, so let's estimate that we could do with part-timers to cover them. Maybe 50,000 to 100,000 full-time equivalents (this is complicated in that the vast majority of congregations meet at more or less the same time, so we would have to have a lot of part-timers).

But then, what about all the other places people congregate? Movie theatres, for instance, and shopping centers, and sporting events. We'd better have armed guards --lots of them, because these places have a lot going on, lots of entrances, lots of different people in charge, to varying degrees.

I expect we are going to need, maybe, a half-million armed guards, more than the police and private guards we already have. After all, we've got to have an adequate supply of good guys with guns, because, as Mr. LaPierre said, there are bad guys out there, with guns.

But I wouldn't be surprised if we could handle the whole thing for around $50 billion per year, which is chump change. Maybe we could even save on that, if we used, you know, community-watch volunteers.

Like that guy --Zimmerman?-- in Florida. We could just deputize them all. So, pretty much everywhere we would go, there would be a friendly, helpful, competent, well trained government employee keeping us safe. And don't forget, we'd all have guns of our own!

And it would be easy to pay for: just raise the price of every bullet sold, by the necessary amount.

The Secret

Something is going unsaid in the flurry of stories about guns in America, and the justifications, the real and important need, for unfettered access to them, for "protection."

But first, let me readily acknowledge that if I lived on a farm in central Nebraska, I would consider it only sensible that I have a firearm: the nearest law enforcement authority, even perhaps the nearest neighbor, would likely be a long way away, and the response to an emergency that I am used to in Hyde Park --often a matter of 5 minutes or less--, would not be forthcoming. That does not necessarily mean I would require a 30- or 100-round clip for my "semi-" automatic weapon. let alone that I would need 20 or more guns. But perhaps an absolute ban of the type we have had, until recent Court rulings, in cities such as Chicago might not be proper.

Those arguments are not heard, though. We hear undifferentiated claims of need for protection, at all times and everywhere. Indeed, there have been laments that the kindergarten teachers at Sandy Hook were not packing heat. The people making those kinds of statements would seem to envision a school full of Diamond Lil-type gals, Glocks tucked into their garters; because, after all, if it were in the desk drawer, or the purse, way across the room or down the hall it would not likely do the job, would it?

The real argument isn't being made: it is that a significant number of people in this country believe that they must protect themselves from the government.

They believe Obama will attempt to drive them into the salt mines of socialism; or that black helicopters will descend to enforce martial law on Happy Valley; or, like the Texas sheriff recently, that the U.N. will attempt to take over his county by force. And if they are too rational to buy into any of these widely-held fears, they believe that the government will simply attempt to ban all weapons and confiscate all those now in the hands of the populace.

They won't say this, at least not many of them. But there are deeply-held fears that the always-at-hand "they" are coming to get "us." The fact that the president is a Negro has exacerbated these fears, no matter that Obama is not Malcolm X; hell, he isn't even Al Sharpton or Jesse Jackson. But once you have such a fear, any attempt at any kind of regulation is viewed as confirmation of the belief.

And so the primary response, across the country, to the killing of a couple dozen six year-olds in a school in Connecticut has been a run on large-capacity magazines and rapid-fire weapons.

Scalia, Sodomy, Bestiality, & Murder

To be fair, the distinguished Justice said that he wasn't equating sodomy with murder. He was just showing that banning one of these practices was much the same as banning the other: both prohibitions would simply be an expression of community morality. The Associated Press (as reported by Slate) quoted Scalia as saying, "If we cannot have moral feelings against homosexuality, can we have it against murder? Can we have it against other things?" 

He was saying that it is legitimate for communities to express their moral feelings via legislation, prohibiting those things to which they object. His example was murder; but how about smoking, or listening to rock and roll, or uncovering a woman's face in public?

Leaving aside the imprudence exhibited (not for the first time) in his speaking publicly on an issue that is currently before the Court, it is instructive that Justice Scalia is willing to follow Rick Santorum in making comparisons between things that have fundamental differences. Santorum, as widely noted at the time, asked how, if we were to allow homosexuals to marry, we could legitimately prevent a man from marrying a monkey. He was ignoring the most obvious feature of the comparison he attempted to force: that of consent. It is present in a marriage between humans, but a member of a non-human species cannot, we understand, give its consent. The same is true, of course, in the case of murder: both parties typically do not consent to the act (if they do, we call it "assisted suicide," and we sometimes allow it). If my morality would forbid some private action by other individuals, Scalia seems to think that I have the right to ban it.

But even ignoring this basic issue, it is hard (though not impossible, I admit) to believe that Scalia would endorse, for example, laws against interracial marriage. Segregation itself was generally a matter of, well, morality, as the majority would have had it, when the Court ruled it unconstitutional. Why was Plessy v. Ferguson wrong and Brown v. Board of Education right, when the former represented an endorsement of widely-held community standards and the latter repudiated those same standards?

Scalia appears, in short, to be saying that the rule of law under the Constitution is whatever the majority says it is, regardless of the rights of the minority.

A Letter to My Senator

Senator Durbin -- on one of the talk shows today you argued (1) that the Medicare eligibility age should not be raised, and (2) that Medicare should be means tested.

As to (1), I agree with you, and not mainlly for the reason you gave (to avoid a coverage gap for retired 65 and 66 year-olds), but because it would save the government very little money. 66 year old people are not the expensive Medicare beneficiaries; various commentators have estimated the savings at such small amounts that such a move sounds just, well, stingy, a suitable first step for a Republican whose actual agenda is to destroy Medicare.

As to (2), means-testing an "entitlement" turns it into a welfare system rather than a universal right. Don't go down this road; it's just the first step, again, in a Republican design, first to denigrate the program's participants as recipients of "welfare," then to destroy the program by "ending welfare as we know it" --substitute "Medicare" for "welfare" and you have Paul Ryan's call to arms. As a defender of traditional American social values, you should not, I think, be willing to place yourself in such a position.

Thank you,

Tony Walters

Business, Small (or, B-S)

Okay, it's time to parse one of the big recurrent themes of the Republicans in Congress, and what Pat Buchanan would call their "Amen Chorus" in the pundit class: Raising taxes on the top 2% would hurt Small Business (the phrase is always, like the name of the deity, capitalized --we will follow that custom here, out of a deep respect for American Religion).

The argument goes more or less like this:

• Most "Small Businesses" are, in fact, flow through entities (e.g., sole proprietorships, limited liability companies, partnerships), the profits of which are taxed on the returns of their owners. Hence, they are taxed at the individual rates.
• Therefore, increasing the tax on upper-income individuals means increasing the tax on their companies, in all these cases.
• When you increase taxes on Small Business, you prevent those companies from hiring more employees. So you stifle growth and employment.

Now, I suppose the first thing to point out are the underlying assumptions:

1. The Small Businesses in question are profitable enough to generate at least $250,000 in profits for (each of) their owners, assuming they file joint returns.
2. Given the opportunity to increase the business by, say, gaining a new customer that would require hiring a new employee, the owner would gladly hire the new person if the owner faced a tax rate of 35% on the extra profits thereby generated. But he would forego that opportunity if his tax rate on the resulting profits would be 39.6%.

As it is only the profits in excess of $250,000 per owner that would be taxed at the higher rates, the additional tax on, say, a $300,000 profit would only be 4.6% of $50,000, or $2,300. Not zero; but not exactly confiscation.

Forbes Fantasies

For the past year or so, I've been receiving Forbes in the mail. I don't know why this is, but I assume someone sent me a gift subscription (can't thank whoever it is because I never found out who). And I find that it has some occasionally useful articles on various aspects of money, investing, and so forth.

But that's not why I read it. I look forward to the one-page essays near the front of each week's edition. Most of them are headlined "Thought Leaders," and they are typically quite awful, when they are not screamingly funny in their incoherence (see Schlaes, Amity). The best, though, are often those of the publisher, Steve Forbes. Today's text is his October 22 piece, "Gold Can Save Us From Disaster."

Steve's argument is that stable currency is the answer to our prayers, economically speaking, and a return to the gold standard would produce the desired stability. Here is his complaint: "An unstable dollar is wreaking havoc on our capital markets, depriving us of money for productive enterprises and future enterprises while subsidizing government debt on a scale never before seen in U.S. history." I'd like to examine that claim.

First, is our dollar unstable?

By coincidence, this piece in the Atlantic online from just last August makes the point that price stability under the gold standard is not necessarily better than under a fiat money standard. In general terms, price stability is a desirable goal, because it allows for predictability in the markets. But it is not necessarily the primary goal of economic policy.

Second, does an unstable dollar "wreak havoc" on our capital markets?

This article from the archives of the Federal Reserve provides fascinating real-world instances of how the requirement to maintain the gold standard, in the face of external pressures, threatened the capital markets --the NYSE itself was closed for four months in 1914 as a direct result of the need to maintain the gold standard; I wonder what Mr. Forbes would have to say about that sort of event. By contrast, the capital markets in the US, whether you look at stock prices and trading volumes or market rates of interest,  currently seem to be functioning well.

Third, are we "deprived of money for productive enterprises and future enterprises" (an awkward pairing; not sure what, if anything, Forbes is getting at here)?

Well, I guess that comes down to a question of who is being "deprived." Given the historic amount of cash in the coffers of American business (see here and here), it is tough to say that businesses don't have money to invest in "productive enterprises or future enterprises." So I suppose we ought to assume that the "we" actually means what it says, that is, Mr. Forbes himself, and others like him. I suspect, in other words, that he is lamenting the historically low level of interest rates, which, he says at another point in his article, punishes savers (or the wealthy in general).

Fourth, is government debt being subsidized "on a scale never before seen in U.S. history?"

Again, it's a little hard to understand what he means by this. I expect that the "subsidy" he refers to is simply the fact that, because interest rates are so low, the government can finance its historically high level of debt at a cost in annual interest that is lower than the total paid in any year during the G.W Bush administration. In other words, the cost to the taxpayer of current government borrowing is less than at almost any time in our history --which, in other circumstances, would be regarded by Mr. Forbes as a good thing (at least, to the extent that he would regard higher costs, in general, to the taxpayer as being a bad thing, which would depend on whether he really cares about "the taxpayer"). So the government is not as constrained in its borrowing as he would wish --for reasons having little to do with the overall state of the economy. Presumably, Mr. Forbes would want the government to be paying much, much more for the money it borrows. Lenders usually do.

Now, it is certainly true that, if we were on the gold standard, interest rates would be much higher: because the supply of gold is fixed, more or less, the government could not print money; and therefore the money already in circulation, backed by gold reserves, would be much harder to come by and so would cost more. And that would be good for lenders. But it would be very bad for borrowers; and borrowers are by far the majority of the people, and certainly are the portion of the population currently most in need. Also, at a time when expanded economic activity may be needed, say, to stave off recession or depression, the government, or the central bank, would not, on a gold standard, have the flexibility needed to pump money into the economy and so increase economic activity; the result would be an inability to put any brake on economic contraction of the sort we have experienced in recent years.

It seems to me that Mr. Forbes is actually (whether he knows it or not) lamenting the lack of deflation in the economy. Deflation is what we could expect if we were on the gold standard; and deflation would suit a lender just fine: it would mean that he'd be getting paid back in ever more valuable dollars. And inflation, on the other hand, is what Mr. Forbes fears; like a great many other conservatives, he appears to ignore the facts of the past 5 years and continue to expect runaway inflation any day now, just as has been predicted, over and over, for 5 years, by his ideological compatriots.

It is worth noting that, in a Chicago survey of 40 economists at the top economics departments in the U.S. academy, all of them (except for a few non-respondents) registered a "disagree" or a "strongly disagree" to the assertion, "If the US replaced its discretionary monetary policy regime with a gold standard, defining a "dollar" as a specific number of ounces of gold, the price-stability and employment outcomes would be better for the average American."

Comments from the 40 economists range from the measured "A time series plot of the price of consumption in ounces of gold, and then in US dollars, clarifies that gold is not a stable standard." to  "A gold standard regime would be a disaster for any large advanced economy. Love of the G.S. implies macroeconomic illiteracy."  to "eesh. Has it come to this?"  

Mr. Forbes, it ought to be noted, joined the magazine that bears his name (and that of his father, and his grandfather who founded Forbes) soon after his graduation from Princeton in 1971, and has never worked anywhere else.  So it should come as no surprise that his exposure to the real world, as opposed to the cloistered precincts of old money, has been minimal and awkwardly-pursued (according to his Wikipedia biography, Time magazine called Forbes's abortive 1996 campaign for the Republican presidential nomination a"comedy-club impression of what would happen if some mad scientist decided to construct a dork robot." and also described his campaign as "wacky, saturated with money and ultimately embarrassing to all concerned." But his think pieces in his family's rag, even ignoring his confident "yes, he [Romney] will win this election, despite all the claptrap to the contrary" in the article under discussion here, are noteworthy: pomposity can be easily satirized; but when it is so spectacularly ill-informed, it satirizes itself.

Euros and Dollars

Not so small a point:

The GDPs of Greece and Portugal, according to the World Bank, are each roughly two thirds that of Germany, and about 77% of the European Union taken as a whole. That is to say, Greece and Portugal are poor countries, the weak sisters of that economic bloc. So, perhaps it is understandable that Greece and Portugal should appear constantly, since the Crash, to be circling the drain. They started in last place, and are certainly in no position to compete now, with their 25% unemployment rates and persistent housing crises. Just today, a Greek woman, while the sheriff was ascending the stairs to evict her, exited her apartment via a fourth-floor window; in response to this widely-publicized suicide, Greece has put most foreclosures in abeyance for the foreseeable future, simultaneously with the adoption of stringent new austerity measures. The populace of that sad country, beset with Nazi thugs roaming the streets in search of immigrants, has virtually nowhere to turn; there's just no money to be had, even for the most basic necessities.

The GDP per capita of Mississippi is about half of that of Connecticut, and roughly three-quarters of that of the entire US, on average (link). So Mississippi looks, at least in this respect, like a Greece or a Portugal --in fact, its GDP per capita is almost exactly the same as that of Portugal and a bit less than that of Greece ($26,087 for Mississippi, vs $26,948 for Greece and $25.395 for Portugal). Mississippi is a "poor" state; it brings up the rear, in terms of the US economy, except for Puerto Rico, the Mariana Islands, and similar possessions.

Yet Mississippi's unemployment rate is 9.2%; very bad by US standards, but only about 1.5 percentage points worse than the national average. The Greeks would think they'd died and gone to heaven if they had that rate. And although, like many areas of the US, Mississippi is undoubtedly suffering in the recession, its situation is by no means noteworthy, in terms of national news coverage.

What's the difference? Why isn't Mississippi, which could be called our "Greece," spiraling out of control as that European country appears to be doing? I've pointed out previously that Greece doesn't control its own currency, and that fact puts the country in a straitjacket when it comes to controlling its economic destiny. But Mississippi, of course, doesn't have its own currency, either; so that can't be the difference.

Mississippi, in foregoing the right to have its own currency, and in surrendering the right to control its borders, gained something that Greece, in taking the same steps, did not gain: the state, unlike the country, is part of a single financial system. Unemployment in Mississippi is subsidized by unemployment compensation that originates at the national level; welfare, social security, Medicare coverage, and so forth, are all either federally provided or at least federally controlled and subsidized. And so, when Mississippians lose their jobs, money is transferred into the local economy, from other states, in the form of unemployment compensation. Elderly Mississippians benefit from Medicare, which does not depend on income earned in Mississippi.

In effect, Mississippi benefits from transfers of these kinds from elsewhere in the US. Rich states, mainly in the North and East, subsidize poor states, mainly in the South and West. It's pretty much consistently that way. Mississippi ranks 50th, and Massachusetts 4th, in the per capita amount of federal taxes paid by its residents. In terms of net contribution (all federal taxes) to the federal budget, Massachusetts ranks 11th, at about $2,133 per resident, net contribution; Mississippi ranks 49th, at a negative $6,765 per capita (link and link). So the local economy of Mississippi benefits substantially from the influx of money from outside the state; this keeps the stores open and their employees working.

We have, in other words, what economists call a fiscal union. All the states are part of the same federal budget and are subject to the same federal tax regime. And their residents all participate in the same social safety net. So it doesn't matter, for example, that Mississippi cannot coin its own money. In fact, that state and most of its neighbors benefit substantially from membership in this fiscal union.

It's ironic that, with a few notable exceptions such as Texas, most of the net contributor states are reliably Democratic, while many of the most Republican (not to say anti-federal government --whoops, I just said it) states are those which benefit most by the transfer to their people of taxes paid elsewhere. 

But back to the main point: the creation of the Euro involved a monetary union --a single currency-- without creating a fiscal union --a unified budget, tax regime, and welfare system. And this is at the heart of the problem for the poor countries of the European Union. And it is why Mississippi is not, and will not be, in the sad state of Greece and other poor members of the Euro. 

Unless certain political elements get their wish, and federal programs are devolved to the states.