Monthly Archives: March 2010

On Competing Federalism

John Payne at the Show-Me Institute has this to say about state legislative opposition to the reach of the federal government’s power:

Setting aside for the moment the specific content of the amendment, it is great to see Missouri and other states attempting to use the nearly forgotten tools of interposition and nullification to stop the federal government from abusing its powers. Of course, these are just tools that can be used for good (such as when Wisconsin nullified the Fugitive Slave Act in the 1850s) or ill (such as George Wallace attempting to preserve segregation). However, all else being equal, the more a political system is localized, the less dysfunctional it is likely to be, because the politicians are not as removed from the people. Consequently, anything that takes power away from the federal government and gives it to the states, or from the states to the counties and municipalities, or from the municipalities to the neighborhoods and individuals, should, as a general rule, be applauded.

While I understand very pertinently the reasons John makes these claims, I come to a different conclusion. Or, at least, I offer a different interpretation. I don’t think it’s right to say that the more a political system is localized, the less dysfunctional it will be. If anything, some of the worst abuses of government happen at the local level, where specific people or organizations can gain control of the executive powers of government, including and particularly police power.

In this sense the analysis misses the point. Devolution of power is not strictly a good thing. The desired aim should be to maintain an balance of power between governments. In some fashion we can think of this balance of power as competition in the sense that governments compete for citizens. Federal, state, and local governments all offer different goods and services to the public; some goods and services are unique to the level of government (like diplomacy to federal governments and trash services to municipalities) and not open to competition, while some goods and services are open to competition between governments. Another way to say it is that that governments compete for the right to regulate different things to citizens. Perhaps the most important service governments offer citizens is protection from other governments: the federal government, for instance, serves a very useful recourse against systemic racism in state and local governments. From the other direction, state and local sovereignty provide a hedge against excesses of federal power.

In some sense this interpretation of federalism says that a balance of power between competing governments best serves individual interests. I stress the “competing” here; looking at America in that light it is clear that there has been a big shift in consumer preferences away from federal provision of goods and services and towards other lower-level government entities.

Note that when governments compete, they offer justifications for elevating their power and reach relative to other governments. While governments might question the justification for other governments they never as a rule question the justification for government itself. In this sense the statist game is a rigged game and I suggest it points us in the directions of thinking of governments as networks for politicians and bureaucrats. The game of questioning the legitimacy of another government or its power is a way for politicians to elide the complex interactions between local, state, and federal governments.

Interested readers will find much to ponder in the collected work of Laurence Tribe and Steven Calabresi. Particularly, I might point you towards Tribe’s 1977 article in the Harvard Law Review and Calabresi’s 1995 article in the Michigan Law Review.

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Assorted Links

1. Are Nielsen ratings still relevant?

2. The suggested reading list for the US Army War College. Chomsky is included.

3. “All chess masters indulge moderately in wines or spirits…”

4. For once, the intern gets some credit.

5. Search trends for “Obama approval rating” over the last 12 months.

The Median Voter Theorem, Utah Edition

In the short term, however, Martin’s concern is surviving the Republican convention. Beyond courting delegates, he said he is counting on traditionally low turnout in the primaries.

“I think people will come around once they get to know my ideas,” Martin said. “People are tired of boring politicians who are married to the system. I have real ideas.”

The article is here. Martin is running for governor of Utah. His policy stances are:

Gold reserves and statewide food storage are the keys to Utah’s future, said businessman Richard Martin, who joined the race for governor Monday.

Standing outside the Salt Lake City Library, Martin announced he is challenging Gov. Gary Herbert for the Republican nomination.

Economic stability will depend on innovative ideas, something current state leaders lack, Martin said.

My only comment is to note that while Martin’s stances are, *ahem*, a little out of the mainstream, I wouldn’t qualify gold hoarding as innovative (China does it). Neither would I qualify emergency food storage as particularly innovative; the United States Federal Government administers an emergency good reserve called the Bill Emerson Humanitarian Trust.

On New Things: The L3C

Wikipedia reports:

The L3C is a low-profit limited liability company (LLC), that functions via a business modality that is a hybrid legal structure combining the financial advantages of the limited liability company, an LLC, with the social advantages of a non-profit entity. An L3C runs like a regular business and is profitable. However, unlike a for-profit business, the primary focus of the L3C is not to make money, but to achieve socially beneficial aims, with profit making as a secondary goal. The L3C thus occupies a niche between the for-profit and charitable sectors. As of September, 2009, an L3C can only be formed in the states of Michigan[1], Vermont, Wyoming, Utah, the Crow Indian Nation and the Oglala Sioux Tribe. On August 4, 2009, Gov. Pat Quinn signed Illinois‘ L3C Bill SBO239 and the law will take effect on January 1, 2010. [2]

HT: Sam Burnett.

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A Thought On the Fair Tax Debate

Missouri will soon decide whether to replace its income tax with a revenue neutral sales tax. This proposal of course has attracted much debate, some rational, some strident. This post was inspired by two conversations: one with Lily Fortel of Grassroots Organizing, a group of political activists on the left, and Abhi Sivasailam, who co-wrote a policy analysis of the fair tax proposal with Dr. Joe Haslag.

My general principle of goverment is that we should treat most of our important government programs as if we were engineers designing and operating HVAC systems (by way of example). The difference of course, is that HVAC systems aren’t political.

So here’s the deal with how the taxonomy of taxes can be misleading. Sales taxes, by definition, are regressive taxes: they apportion liability regardless of income level. Graduated income taxes, by definition, are progressive: you can tax people by their income level.

But here’s the problem. These are definitions of taxes in a vacuum. In the real world parameters matter and allow us to make more nuanced judgments. A bad income tax is not necessarily superior to a good sales tax.

American conservatives dislike our income tax structure. It is costly to comply with, inefficient, and applies high marginal tax rates to our most productive citizens, stifling innovation and economic growth on the margin. These are legitimate concerns. Liberals, of course, are a far more varied group, but the general consensus is that sales taxes are too blunt an instrument of fiscal policy, since it is harder to exempt low-income people.

But I suggest that a re-evaluation of the costs are in order. Implicitly, complying with an income tax is extremely costly on every level. One must keep records, and receipts, and spend many hours doing tedious calculations and revisions or outsource it to a professional; the more successful one is the worse this problem becomes because you start having to deal with more complicated tax structures. The incentive to cheat on one’s taxes rises with income, and the richer you become the more tax shelters of some variety you can buy your way into. We spend inordinate amounts of money on monitoring and enforcement through revenue departments, who are unique amongst all government entities in the amount of scorn and derision flung upon them by virtually everyone of every political stripe.

Keep in mind this basic fact of our income tax system. Many people never file or sufficiently pay their taxes and get away scot-free because the IRS simply can’t monitor everyone.

The costs of complying with a sales tax are far simpler, since instead of dealing with individual citizens, you deal with the far smaller number of businesses, which are far more easily regulated. There are already straightforward and efficient mechanisms for enforcing and collecting point-of-sales taxes. Businesses face far great incentives to meaningfully comply, since sales taxes are usually tied to the status of their business license. Functionally, increasing a sales tax would at best only marginally increase the cost of collecting the tax. You don’t need much extra machinery to scale up or down.

There are other arguments relevant to this debate, but the point here is simple: we should consider the implicit costs of the economy-wide market distortions that exist relative to a world in which sales taxes replaces some or all of the tax revenue for governments.

Right? Because a world where there is an artificial market for tax professionals, for example, is  a world where talent that might find itself pursuing other more productive options is drawn into preparing income taxes for people. A world in which there is an artificial market for tax professionals who help you shelter your income from taxation is a world in which very smart people are incentivized on the margin  to pursue careers in wealth management and protection as opposed to wealth creation. There is a very clear tradeoff in the choices people make career-wise; it is a common theme that grossly oversized incomes in the financial sector drew some of the world’s greatest minds away from professions like teaching, medicine, the hard sciences, etc, over the past twenty years. In some sense the forgone benefits of the advancement in other fields due to the financial sector brain drain is incalculably great. Likewise, industries that exist to add nothing of value but to enforce and monitor a tax system that is comparatively less efficient are functional brain drains. Perhaps the incentives are lower, but they are systemic. Forgone economic growth is particularly hard to calculate, demonstrate, and weigh, but it is surely important.

In a nutshell, income taxes are vastly more expensive to enforce and monitor and generate large industries devoted to servicing income taxes and not doing other productive things. Sales taxes don’t have any of those liabilities. To extend the nod to engineering this fits the maxim that the best interface is the most idiotpoof because it’s the cheapest to maintain. I leave the implication up to the reader.

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Thoughts From A Debate Tournament

I judged several rounds of debate at the Heart of America National Forensic League District tournament at Liberty High School in Kansas City this past weekend with my friends Carl Werner and Rick Puig, both former Kansas City public forum debaters; they also own DB8Zone, producing quality LD and public forum briefs.

My high school debate career was 4 years of policy for Parkway North in St. Louis. Later on I debated at the University of Missouri-Columbia, where I spent 2 years debating policy on the NDT/CEDA circuit. Curiously, for some time I was involved in Cross-x.com, through which I met, virtually speaking, Phil Kerpen. I had many great conversations with Phil over the years and he has an exceptionally sharp mind, though he is far more radically libertarian (dare I say conservative?) than I am.

At this tournament I saw some interesting rounds of value debate (Lincoln-Douglas) over the topic of jury nullification. Debaters on this topic tended to make extreme arguments, getting away with claims like ‘jury nullification overturns entire bodies of law’. That’s true when multiple juries nullify multiple trials over the same issue with the same law, but doesn’t generally exist in the more common and likely example of juries nullifying specific trials on a one time basis. I thought the argument was generally stronger in favor of the affirmative on this topic, though I did vote negative in one of these rounds.

Policy debate results were mixed. I think I judged all three teams who qualified to nationals, and was fairly impressed by one. They ran an affirmative expanding Medicaid reimbursement to midwives, making an argument that the existing restrictions on reimbursement excluding midwives constituted a meaningful and illegitimate restriction on women’s reproductive rights, linking it to larger claims about biopolitics and governmentality. The negative made arguments about topicality, federalism, and the economy. The level of debate seemed fairly comparable to St. Louis debate and the debaters seem to know what to do when they recognize that their judge is familiar with the structure and language of policy debate. I do remain concerned about the short and intermediate viability of policy debate teams particularly in the state as school districts face budget shortfalls.

The sole public forum debate round I judged was the break round to nationals (a 7-judge panel). The topic was affirmative action. I believe I was the only judge with any policy experience, and also the only judge to vote negative in a 6-1 decision for the affirmative. I’d voted on a framework argument advanced in the initial speech by the con side making the claim that we should evaluate oppression and inequality from a class-based, not a race-based, perspective. I’m not sure I can claim to have made a correct decision, but I found it curious that I was the only judge in the round that evaluated that framework.

I am hearing good things about debate in Missouri this year. More high school teams are traveling and receiving TOC bids, and the team at Missouri State did fantastically well at the NDT last year. I don’t know if my anecdotal sample lets me come to any conclusions about how vibrant the circuit remains, and it’s hard to comparatively evaluate teams from this year against teams I remember. I find good argumentative development and not a lot of strategic development, but that’s generally true of high school debate in all years.

After the entirety of my experience, I conclude the the single most urgent problem facing debaters is the lack of consistent quality judging at tournaments. It is a hard thing to get qualified former debaters to high school tournaments, mostly because they’re in college and the short distance they’re willing to travel is inversely proportional to the amount they get paid. I am gratified to see several former debaters continue to be active in the activity, coaching and teaching debate at high schools, and I am gratified to see the restrictions on competition imposed by the Missouri State High School Athletics Association ease after years of diligent pressure.

The other problem facing high school debate programs is the one no one wants to talk about. Where does the funding come from in rocky financial times?

Thought: do any charter schools offer debate programs?

Oh, and if any former debater or interested person is interested in judging at state and national qualifiers in the upcoming month, information on tournaments is available on Cross-x.com, here.

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A Data Point For Homeschoolers

The 2009 National Geographic Geography Bee state qualifiers were composed of 41 students (out of roughly 5800) who are listed as sponsored by a homeschooling organization. The true number of homeschoolers participating at the state level might be higher, since some of them qualify through competitions held by regular schools, but disaggregating that from this level of the data would be impossible. In any case I find it somewhat implausible that the number is much higher (over 100).

In any case, less than 1% of state level qualifiers are nominally from homeschool organizations. By contrast, 6 national qualifiers (out of 58) are nominally homeschoolers, about 10.4% (I’m including the Alaskan state champion, who qualified through a distance learning school).

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On Broken Windows

After making a rather incoherent comment on Hazlitt’s ‘broken window’ parable at a libertarian book club meeting, Abhi Sivasailam suggested I write a post to clarify. My thought was to extend the insights from Hazlitt with observations from institutional economics.

The ‘broken window’ parable is used to distinguish the economic interactions that occur when a person buys a suit from the economic interactions that occur when the person has forgo the suit to repair a window a thief broke. The key insight is that the forgone opportunity to purchase a suit is itself an implicit cost that people often fail to consider when comparatively evaluating both interactions.

My thought was to extend Hazlitt’s analysis further. When we look at the glazier and the tailor and the brick and the suit that wasn’t made, we can compute the immediate implicit costs of the vandalism. But it doesn’t stop there. Every transaction, real or forgone, implies an extensive chain of economic activity. After the brick is thrown people have more reason to think about the security of their persons and their possessions. A brick through a window means a whole host of interactions happen: people demand more security services, either public or private. The increased demand for laws and mechanisms to protect property from loss resolves itself in a manner that involves a whole system of costly interactions.

The world post-brick is not simply a world of a forgone sales opportunity for the tailor. It is a world of forgone opportunities for everyone in the community, because there is a cost to the cleanup, to the search and prosecution and punishment of the criminal; costs that everyone in a community might be expected to be reasonably invested in. These costs shape and determine the underlying institutional costs that the community faces both now and in the future.

A thought for a further post: in the real world, some market actors invariably engage in rent-seeking behavior. This is particularly evident in our justice system. There are insights from Sam Bowles’s ideas on ‘guard labor’ that are relevant here.

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A Follow-up to the School Lunch/’Local Food’ Debate

Caitlin Hartsell in the comments:

It’s all well and good to link to articles that show that nutritional foods benefit children… I don’t think Sarah or anyone else would really disagree with you there. But I don’t see any studies in your list that say that local food is more nutritious or better for students than food from a distance, which is the point that Sarah made. Your entire argument and objection to Sarah’s posts is useless without that. (I explain it better in a blog post where I made the argument in the other direction: local foods are less likely to be grown in optimal climates with good soil and their freshness and potential nutritional content is not improved and potentially worsened as a result of the “local” emphasis: http://www.showmedaily.org/2010/02/buying-local-not-always.html)

While you make nice arguments for nutritional food, they do not address anything Sarah says at all. Her objection is not to local foods in and of themselves, but to districts forcing it upon their students as the only option. The real issue here is giving children access to healthy foods, whether they come from Missouri or California or South Africa. An undue top-down emphasis on locality is (as Sarah put it) protectionist and subverts the real issue of nutrition.

I noted earlier that part of the problem when we talk about ‘local food’ is that not everyone means the same thing at the same time. Functionally, the term is used in a way that doesn’t exclusively include spatial distance. What is typically meant is to distinguish food that is part of one system (processed, national distribution, industrial production) from other systems that reject one or all of those parts. When I say ‘local food’ I generally am talking about food that isn’t produced using industrial methods on large factory farms. I certainly don’t mean foods that are entirely processed, like refined sugar, or spam, or the mystery meat patties served on so many ‘hamburgers’ in schools. Those foods are typically distributed on a national scale to capture efficiencies of scale in branding and transportation. So in a sense you’re right. The spatial distance between where a food is produced and consumed isn’t always a strict indicator of quality. But the people who use the phrase ‘local food’ mean more than strict spatial distance when they’re using the term meaningfully.

So there are three more issues that are relevant in answer your comment. The first is that your comment that ‘local food’ is less likely to be grown in optimal climates which means we  don’t get to maximize freshness and nutritional content is specious at best. It’s specious because it doesn’t happen. Farmers who expect to sell to local populations try to forecast precisely so that doesn’t happen because that is where their paycheck comes from. And the other argument is that the drive towards processed foods based on industrial agriculture means that our food networks are optimized for production of those foods (corn, sugar, wheat, etc) which has a crushing effect on the production of other indigenous edible food. Local farmers have a variety of things they can and could produce that are optimized for their region and climate. This book has a good list of those indigenous foodstuffs. If you’re in Missouri, you might visit some local or regional producers, like Patchwork Farms, or Chert Hollow Farms, and actually talk to farmers who make these decisions. I have actually done this through work at local restaurants and in later work in vineyards around the state. I claim that my assessment of these systems is empirically superior to Sarah Brodsky’s armchair hypothesizing.

The second issue you don’t seem to get is that I’m making a distinction between industrial agriculture and agriculture regimes that aren’t predicated solely on maximizing yield. Earlier I referred readers to literature on the nutrition and genetic dilution hypotheses, which state generally:

  • Maximizing yields means maximizing water weight at the expense of nutritive content
  • Selection for strains focuses on plant systems that maximize yield while crowding out selection for the systems that provide and generate nutrient content.

Both hypotheses have extensive empirical grounding going back at least 25 years. Whether or not you agree with those hypotheses they are fundamental issues at the heart of this debate that Brodsky never addresses (I don’t think she is even aware of their existence). I’ll address your specific claim here as well. Your claim that distance and nutritional content are not strictly related might be true but the argument I am making is that it is the producer and manner of production that is the true indicator of quality foodstuffs. So yes, tomatoes from California might be cheaper than tomatoes produced in Columbia in mid-winter but that’s a misleading comparison; local Columbia farmers are not selling tomatoes right now. The choice the market should be making available to me is a selection of Californian tomatoes where I can discriminate by production method because that’ll give me accurate nutrition information. Unfortunately the market rarely makes that information available. Earlier I noted that locally produced foods have one huge advantage over foods distributed nationally: consumers are far better placed to evaluate quality and safety of local foods as opposed to nationally distributed foods, the safety and quality of which are regulated by ineffective and incompetent federal regulators. Brodsky doesn’t address this argument at all.

Brodsky is a linear thinker, not a non-linear thinker. She tends to make arguments that justify the status quo without realizing the path-dependent nature of the interactions between agriculture policy and market conditions.  For years our government has restricted the ability of smaller producers to sell their products locally and impeded their access to national distribution. For years our government has doled out huge amounts of production subsidies to large agribusiness. My argument is that Brodsky’s emphasis on ‘provide our children cheap food’ misses the point that all the cheap food we feed our children in schools has large implicit costs in terms of agricultural production and academic achievement and health outcomes that we are only just waking up to. There are numerous instances where Brodsky completely misreads articles where the people making these decisions (school nutrition counselors, district supervisors, etc) say things like ‘it’s expensive and difficult to change the quality of the meals we provide but it’s worth it’. Most notably there’s that post where she mocks an organization of kids in New Orleans who are trying to make their schools serve them good food, which I find unbelievably arrogant and offensive.

Finally, Brodsky fundamentally misses how these changes are happening. They are systemic and grass-root. Go through the articles she’s posted on the subject and count the number of low-level local functionaries who are referenced. Widespread changes in consumer preferences are being filtered through school boards, state and local agricultural boards, and slowly through the USDA. Laws that serve to close the market to small local producers are being overturned. It is a slow process but it appears that consumer preferences are evolving. This is not a process being driven in a top-down fashion. It is a systemic change in consumer preferences that is expressing itself through nonlinear interactions on many levels between a variety of public and private institutions.

Finally, you make the claim that you object to districts forcing ‘local food’ as the only option. My claim is that the status quo is defined primarily by school districts forcing children to eat heavily processed foods, low in nutritional value. This is currently their only option. I will defend that forcing children to eat ‘local food’ is far superior to the status quo, where millions of children are served crappy lunches that tend to look like this.

I also make another policy recommendation earlier that one possible solution is to increase competition in the lunchroom by allowing cafeterias to face competition from private vendors. This is a simple solution, because school boards can set some kind of mandate that meals provided by private vendors have to have some minimum nutritional content and so you can experiment with what is possible.

And hey, Walmart is getting into the game. I claim that’s evidence that my argument that consumer preferences are changing is true.

A final thought: I don’t make the food miles argument or any argument about carbon production but the distribution chain is one example where nonlinear thinking yields insights that linear thought does not (essentially the idea that the costs of inputs here are best thought of in non-linear not linear terms).

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Keynes on Clemenceau on Germans

From The Economic Consequences of the Peace:

He felt about France what Pericles felt of Athens–unique value in her, nothing else mattering; but his theory of politics was Bismarck’s. He had one illusion–France; and one disillusion–mankind, including Frenchmen, and his colleagues not least. His principles for the peace can be expressed simply. In the first place, he was a foremost believer in the view of German psychology that the German understands and can understand nothing but intimidation, that he is without generosity or remorse in negotiation, that there is no advantage he will not take of you, and no extent to which he will not demean himself for profity, that he is wihout honor, pride, or mercy. Therefore you must never negotiate with a German or conciliate him; you must dictate to him. On no other terms will he respect you, or will prevent him from cheating you.

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Quick Missouri Supreme Court Bleg: Springfield v Adolph Belt Jr.

I received an email from Beth Riggert, Communications Counsel for the Missouri Supreme Court, noting today’s Missouri Supreme Court decision in the Springfield red-light camera case, City of Springfield, Missouri v. Adolph Belt, Jr. Riggert’s email noted that neither her email nor the summary of the case were to be quoted (does anyone know why this is the case?), but here is an excerpt from the decision:

This is a $100 case. But sometimes, it’s not the money – it’s the principle. When Adolph Belt, Jr., a 30-year veteran of the Missouri State Highway Patrol and a former Kansas City police officer, received a notice that his car had been photographed running a red light in Springfield, he did not take the matter lightly. Undeniably a traffic expert, Belt timed the yellow caution light at the intersection and found that it was rather quick. He also concluded that the stoplight and the cameras needed to be synchronized.

The Springfield city code provides that hearings for violations of this ordinance are to be heard in an administrative proceeding. In Belt’s proceeding, the hearing examiner denied Belt’s challenge to his citation and found him liable for the prescribed $100 penalty. Belt then appealed, requesting a trial de novo before the circuit court. The circuit court dismissed the request for a trial de novo, finding it had no jurisdiction to hear the appeal. Belt now appeals the circuit court’s dismissal, arguing he is entitled to a trial de novo for a municipal ordinance violation.

Violations of municipal ordinances such as this one cannot be determined administratively but must be heard in a division of the circuit court. Section 479.010, RSMo Supp. 2009.1 The administrative proceeding is void, and Belt’s $100 penalty is vacated.

You can also listen to the audio of the oral arguments here.

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