The Triumph of Politics Over Policy

In a New York Times column in defense of a $15 national minimum wage, Paul Krugman paints anyone who doesn’t see the unalloyed benefit of a $15 minimum wage as a radical while those who support it are moderates:

It’s true that once upon a time there was a near-consensus among economists that minimum wages substantially reduced employment. But that was long ago. These days only a minority of economists think raising the minimum to $15 would have large employment costs, and a strong plurality believe that a significant rise — although maybe not all the way to $15 — would be a good idea.

Why did economists change their minds? No, the profession wasn’t infiltrated by antifa; it was moved by evidence, specifically the results of “natural experiments” that take place when an individual state raises its minimum wage while neighboring states don’t. The lesson from this evidence is that unless minimum wages are raised to levels higher than anything currently being proposed, hiking the minimum won’t have major negative effects on employment — but it will have significant benefits in terms of higher earnings and a reduction in poverty.

Paint the economists at the Congressional Budget Office as radicals. Their findings were that raising the minimum wage to $15 would pull 1 million people out of poverty and plunge another 1.5 million into a poverty it’s hard to see how to alleviate. This CNBC article on the outcomes from Seattle’s real life experiment in increasing the minimum wage suggests that Dr. Krugman is exaggerating the consensus among economists:

The conflicting studies highlight a broader debate about what a $15 federal minimum wage might do for businesses and workers nationwide. Federal Reserve Chairman Jerome Powell even touched on the issue during his testimony before the House of Representatives this summer saying. “there is no consensus among economists … economists are all over the place on this.”

IMO the preponderance of the evidence suggests that the best policy is what we already have: in jurisdictions which feel the need, go ahead and increase the minimum wage and leave the rest alone. Add that none of the studies consider the run-on effects of a national increase and I would say the evidence is mixed at best. For example, I’ve never seen a study that takes minimum wage multiple union contracts into consideration in estimating the effect.

I think the best policy would be a gradual increase in the minimum wage with mandatory supporting votes in Congress along the way. That wouldn’t satisfy the “Fight for 15” crowd and it wouldn’t punish Red States but I do believe it would be a better policy.

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Reversal

At Outside the Beltway James Joyner remarks on the incoming Biden Administration’s plan to extend a path to citizenship for every immigrant, whether legal or not:

The plan would effectively amount to amnesty for everyone who broke our immigration laws to get here, unless they can be proven to have broken other laws (in which case one presumes they would just remain in the shadows rather than apply for legal status). That would, yet again, be a slap in the face to those who waited years to get here legally but may beat the alternatives, given the logistics of rounding up and deporting tens of millions of illegal immigrants.

That is an example of the tertium non datur fallacy. There are other possibilities than legalizing everyone and instant enforcement.

IMO what we really need are immigration laws that resemble those of Canada, Australia, and New Zealand—countries that we resemble in a variety of ways. They are neither authoritarian or socialist hellholes but they restrict immigration strictly at least in part by making it difficult for those in their countries illegally to find work. Workplace enforcement is the key to controlling immigration and the Trump Administration’s reluctance to implement it called its sincerity about controlling immigration into question.

Wage growth among non-skilled or low-skilled workers has been slow to non-existent for decades. The main effect of increasing the immigration of non-skilled or low-skilled workers is to apply wage pressure to previous immigrants and to blacks. I believe that is a perverse objective.

Supporters of immigration amnesty programs should recall that after the last such program during the Reagan Administration only a minority of illegal immigrants in the country sought citizenship and a substantial increase in the number of illegal immigrants soon followed. Whether that was intentional or unforeseen we should be aware of the perverse consequences.

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The Growing Chinese Economy

The Chinese authorities have announced that China’s economy grew during 2020, the only major economy in the world to do so. The editors of the Wall Street Journal consider the announcement:

Some of Beijing’s cheerleaders want you to believe this is mainly because the Chinese government acted so aggressively to suppress the pandemic. That story sits uneasily alongside Beijing’s slow-rolling of early information about Covid-19 when more information sharing might have helped other countries.

Beijing adopted particularly aggressive lockdowns once it did act, sealing off entire cities and even now locking down apartment buildings or neighborhoods at a moment’s notice to suppress outbreaks. To the extent anyone can trust Beijing’s data about virus spread, it appears to have Covid mostly under control.

But a closer look at the economy suggests the growth has come from somewhere other than Beijing’s putative suppression of the pandemic. China’s Communist Party reverted to its old economic-crisis playbook to goose debt and exports while tightening political dominance over the economy.

New credit has exploded, with total public and private debt expected to exceed 270% of GDP in 2020, up 30 points in one year. Most of that has gone to state-owned firms and exporters. Smaller, more productive private companies that serve the domestic market report credit shortages. This undermines long-term growth but suits President Xi Jinping’s goal of consolidating Party control.

One clue that something’s amiss is that retail-sales growth slowed as the fourth quarter progressed, slipping to 4.6% year-on-year in December and now significantly lagging overall GDP growth. Lockdowns explain bad retail sales in the West, but China is supposed to be open for business. Dipping sales suggest, as economist Michael Pettis argues, that much-needed rebalancing toward domestic consumption is stalling or reversing as the global pandemic crisis drags on. The economy was driven through 2020 mainly by fixed-asset investment and that old standby, real estate.

Can China’s economy grow indefinitely by lending itself money and increasing its share of total world production? I’m skeptical. Perpetual motion doesn’t work. If it looks like perpetual motion and it sounds like perpetual motion and it acts like perpetual motion, it is perpetual motion.

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The Question I Want Answered

Pretty clearly the question that Pfizer and Moderna want to answer is how many doses of their vaccines can they produce by the end of 2021? That isn’t the question to which I want to know the answer. The question I want answered is how long will it take them to produce another 20 million doses?

The reason I want it answer is the effect that might have on policy. The answer isn’t obvious. It might be that they can produce another 20 million doses in 10% of the time it will take to produce 200 million. But it might be that it will take 90% of the time it will take to produce 200 million or anything in between.

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Fighting Today’s Problems With Yesterday’s Tools

I materially agree with Maria Flynn’s post at RealClearPolicy. Here’s its conclusion:

Building back stronger demands that we acknowledge that our public education and workforce systems have been fighting today’s battles with inadequate resources, but we must also ask critical questions about how and whether their challenges are compounded by an aging policy infrastructure. We must consider how our rapid transition to a digital economy presents not just unimaginable challenges — but limitless opportunity.

It’s not just our public education and workforce systems that have this problem. It’s every single system we have in place from health care to financial to legal. There are too many people making too much money in all of them for them to allow them to be changed without a fight. I’m guessing that in four years or eight years we will be able to make the same complaint.

Fortunately or misfortunately as you would have it while history doesn’t repeat itself it does rhyme. The problem that our system of public education was created to address back at the turn of the last century is more of a problem today than at any point in the intervening century. Restoring it to its roots would actually help to correct that but it’s hard for me to imagine that taking place.

As for our workforce systems I suspect I see them differently than Ms. Flynn does. IMO our labor strategy has had as its primary objective maximizing the number of minimum wage jobs while our educational system has had as its objective minimizing the number of people who can afford to work for minimum wage. See a mismatch there? The “automating moment” provided by the COVID-19 pandemic has eroded many of those minimum wage jobs. Is it actually possible to restore them? Is it in our national interest to do so? And what will all of the people who can’t earn more than miminum wage do? Maybe the skyrocketing homicide rates seen in many cities during 2020 provides a hint.

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Different How?

In a piece at Foreign Policy Heather Hurlburt tries and, I think, ultimately fails to draw a sharp distinction between Joe Biden’s approach to foreign policy and Donald Trump’s:

Biden is famous, or infamous, for his personal connections to world leaders. “You can drop him into Kazakhstan or Bahrain, it doesn’t matter—he’s gonna find some Joe Blow that he met 30 years ago who’s now running the place,” Julianne Smith, a Biden advisor, told his biographer Evan Osnos. Former Senate Majority Leader George Mitchell described welcoming foreign leaders to the Senate. “I’d say, ‘Here’s Senator Smith, here’s Senator Jones.’ When I got to Joe, the leader would look out and say, ‘Hi, Joe.’”

Biden’s attention to personal relationships implies a valuing of the softest of soft powers: individual experience. It points to one of the achievements of U.S. foreign policy that experts have the hardest time compassing and measuring: the attractive power of the United States to others around the world. Lists of U.S. achievements seldom note how two generations of Cold War-era and post-Cold War leaders’ worldviews were shaped by programs that brought them to the United States, or Americans to them, and what a triumph that was for U.S. interests.

While relationship-before-task may be dogma in some management consulting circles, it doesn’t count as a foreign-policy strategy. Biden is not noted for either contributions or attachment to one of the major schools of U.S. foreign-policy thought. Indeed, when asked by Osnos to name Biden’s major foreign-policy contribution to his administration, Barack Obama credited his vice president’s ability to focus on concrete U.S. goals, and specific means for achieving them, “rather than get caught up in broader ideological debates that all too often end up leading to overreach or a lack of precision in our mission.”

and

In 2021, the voices vying to shape U.S. foreign policy include both the straightforward self-dealing that characterizes Trump’s approach and the Kissinger renaissance, which offers a more sophisticated self-interest in which ideals surrounding human rights and solidarity must be sacrificed in order to sustain the core of the U.S. democratic experiment.

Biden believes otherwise. But he combines the moral focus of a liberal internationalist with a realist’s skepticism of grand interventionist schemes—and a rhetoric about the needs of Americans at home that gets often reflexively classified as isolationist.

Okay. Not an intellectual. Check. Relationships over tasks. Check. Self-dealing. Check. She strives to distinguish between Joe Biden’s liberal interventionism and Barack Obama’s. Mr. Biden has supported every use of force by the United States over the period of the last 30 years. Was he “reluctant” to do so? I see no sign of that.

I think the greatest differences will be that he will join with European leaders to focus on environmental causes and human rights issues. Unlike European leaders he will actually mean it.

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Change of the Guard

The editors of the Wall Street Journal remark on the changing of the guard in Springfield:

Mr. Welch was first elected in 2013 from Hillside, a Chicago suburb south of O’Hare Airport, and at least he’s talking about decentralizing power. “I want to examine the rules and possibly make changes—possibly make a lot of changes,” he said. One might be a 10-year term limit on the speakership.

Mr. Welch, who is Illinois’s first black speaker, urged a lowering of partisan tensions. “Why do our politics have to be about negativity and destruction?” he asked. It’s a good question. But it will take more than bipartisan bonhomie to reverse Illinois’s spiral of high taxes and bloated government, which has caused so many residents to flee over Mr. Madigan’s tenure.

Democrats finally dumped Mr. Madigan because they feared his high public profile and a corruption probe were hurting them. But they still like Mr. Madigan’s system of public-union dominance and gerrymandered districts. The old boss may be gone, but his system survives.

I think that “like” understates the scope of the problem. It’s intrinsic to their business model.

I’m not opposed to labor unions but I’m highly skeptical of public employee labor unions. The arrangement of recycling taxes to wages to political contributions not to mention foot soldiers is inherently corrupt.

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How to Repay?

There is one thing in newly-elected Illinois House Speaker Chris Welch’s acceptance speech, reported by the Chicago Sun-Times, with which I am in total agreement:

“The state will never be able to adequately thank Speaker Madigan for the job he has done,” said Welch, who recently torpedoed a Republican-led effort to use a special House investigative committee to follow up on matters raised by a federal investigation into Madigan’s dealings with Commonwealth Edison.

Laws against involuntary servitude and cruel and unusual punishments prohibit it. Although I suspect that was not what he meant.

We can only hope that the Department of Justice takes care of repaying him for us. If only to “encourage the others” as Voltaire put it.

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Transition

The editors of the Washington Post have published what I wouldn’t be surprised to become a growth genre, the “Trump was awful but some of the things his administration did weren’t so bad” piece. In this case it’s the recommendations of President Trump’s Commission on Law Enforcement and the Administration of Justice:

WE DID not have high expectations for the commission that President Trump appointed to “study crime . . . and how we can restore public confidence in law enforcement to its rightful place.” Its membership was skewed, with only past and present law enforcement officials represented, and its proceedings were secretive and closed. A federal judge deemed the group in violation of federal law and ordered its findings to include a prominent disclaimer. So it’s a pleasant surprise, and an indication that law enforcement professionals and their critics can find some common ground, that its final report includes some useful recommendations. The Biden administration should build on them while undertaking a more expansive review of the country’s criminal justice system.

What were the recommendations of which they approved?

To help restore confidence in police, the committee recommended that every state require police departments to have an independent agency investigate all fatal shootings and other serious use-of-force incidents and make improvements in how complaints from citizens are handled. Also noteworthy were proposals to allow officers to issue summonses for low-level offenses instead of making arrests, adjust felony thresholds for nonviolent offenses, provide mental health and substance abuse screening for jail inmates, and offer more help to crime victims.

They conclude:

The report’s complete silence on key issues of systemic racism and mistrust in law enforcement unfortunately has helped undermine its useful recommendations, with some critics suggesting the work simply be discarded. That’s shortsighted. Instead, the report — along with the thoughtful conclusions of the prior Task Force on 21st Century Policing commissioned by the Obama administration — should serve as starting points for the soon-to-be Biden administration as it tackles the critical questions facing U.S. criminal justice.

There is a tremendous temptation among incoming administrations, particularly those which have billed themselves in one way or another as “reform administrations” which characterizes both the Biden Administration and the Trump Administration, to attempt to do everything the opposite way in which it was done in the previous administration. It should be resisted. Just as being the “un-Obama” was impossible it is likely that being the “un-Trump” will be equally difficult.

You can deviate from the style of your predecessor but events have shown that there are reasons, whether political, geo-political, or otherwise, which guide policies and they tend to have considerable inertia.

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Creating Problems

I wanted to pass along one brief passage from Holman Jenkins’s most recent Wall Street Journal column:

Seldom has there been a clearer test of how the media sets the agenda for politicians. The press repeats this misleading statistic [ed.: “confirmed cases”] a thousand times a day to no real purpose, leaving us only less certain where we stand in the herd-immunity race. Underplaying the disease’s true prevalence, we have (without realizing it) conditioned people to be less careful even as we preach at them to be more careful. We cause them to underestimate their exposure risk and overestimate their death risk.

Rather than emphasizing closing businesses and masks we should be emphasizing social distancing. Rather than reporting case positivity rates we should long ago have been doing epidemiological testing.

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