Agreeing to Disagree

I agree with the premise of Michael Bloomberg and Arne Duncan’s op-ed in the Chicago Tribune—the U. S. economy isn’t working for too many Americans:

About half of Americans don’t own stocks, and the share of national income going to workers — rather than investors — is actually near an all-time low. Meanwhile, almost half of all American workers earn an average of $10.22 per hour, or about $18,000 per year. President Trump hasn’t pushed for an increase in the minimum wage, even though it hasn’t increased in 10 years.

Millions of Americans, especially people of color, struggle to find a job. In Chicago, more than 45% percent of black men between the ages of 20 and 24 are jobless. This is what President Trump calls “the greatest economy in the history of America.” We couldn’t disagree more.

It used to be that a high school diploma came with a ticket to the middle class. That’s no longer true because many good jobs have been lost to global trade and technology. But instead of focusing on creating good new jobs, and helping people get the skills that today’s careers require, President Trump promises to bring the old jobs back. And he has failed, miserably.

but I disagree with their prescription:

We both strongly believe that America needs more paid apprenticeships, which provide on-the-job training for good jobs. They have been proven to work in countries such as Germany, England and Switzerland — and they can work well in the U.S., with federal support. Apprenticeships give workers training and experience that will open doors for their careers, and they ensure employers can find employees with skills they need to fill jobs. Yesterday, one of us (Bloomberg) announced a strategy for creating 1 million paid apprenticeships annually.

We have both also seen how vital community colleges are. They are the pathway to employment for millions of Americans. The federal government should make a major investment in their capacity to prepare students for employment, connect them to growing industries, and align curricula and standards with the skills that lead to good jobs. That includes increasing the number of students earning work-based degrees, which integrate classroom instruction with apprenticeships, internships or meaningful work-study experiences. We can incentivize success by rewarding states, local communities and schools that boost completion rates, job placements and earnings of graduates.

We should also help workers transition to new jobs by providing federal student aid to quality short-term certificate programs that demonstrate strong outcomes. We must also extend the earned income tax credit and unemployment insurance to Americans in training programs, so they can cover child care costs, rent, and other living expenses while they are investing in their future.

These steps will help to bridge the prosperity divide in America and ensure that our economy works for all people, in all parts of our country.

There are many reasons for the present lack of opportunity and income inequality but spending more money on education or paid apprenticeships, something I support, won’t address any of them and it may exacerbate existing problems. Rather than presenting a coherent counter-argument, I’ll just cite a few examples of why their prescription won’t work.

Presently, 16 million Americans are in college. 20 million Indians are in college in India. Today there are 70,000 journalism majors in the country’s J-schools. That’s more than the total number of people working as journalists. I think that people should pursue any field of study they care to—I just don’t think we should subsidize, either via grants or loans, fields of study unlikely to result in gainful employment. That won’t just require spending more on education. We need to redesign our entire education policy.

The problem with apprenticeship programs is that, unless very carefully crafted, in our present economic and social climate they will result in reducing the number of jobs for which Americans will be hired.

Our problem is not that we don’t spend enough on education or that we don’t have apprenticeship programs. After all we spend more on education than any other country in the world. Our problem is that the number of good jobs isn’t increasing fast enough and we’re importing too many workers to fill the good jobs we are creating.

As I have said before the sources of income inequality are

  • Financialization of the economy
  • Ferocious subsidization of certain fields
  • Immigration, legal and illegal, maintaining a slack labor market

Unless we do something about those issues nothing else will produce much in the way of results. Those are the basics.

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Theme of the Day

This morning I read three different columns by three different writers from two different political parties in three different outlets that might as well all have been written from the same rough draft. The gist was this.

I don’t necessarily think that Trump did the wrong thing and it looks like it’s turning out okay but I don’t like Trump, I wouldn’t have done it, and I don’t like the process he uses to arrive at his courses of action.

I don’t like Trump, either, but I acknowledge that he was elected president fair and square and that presidents get to do things in their own way. We don’t get to micromanage. That’s not the way things work.

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What Will Promote “Regime Collapse”?

I wish I could say I agreed with Michael Makovsky and Jonathan Ruhe’s Washington Post op-ed about Iran but I can’t. I agree with them that Iran’s mullahocracy is reprehensible. And I agree with this:

To truly loosen the regime’s grip on power and on the region, the United States must explicitly make regime collapse its policy. We don’t mean “regime change” through a U.S. ground invasion, such as Iraq in 2003, but the imposition of consistent, comprehensive pressure, beyond economic sanctions, to exacerbate Iran’s internal tensions so that the regime is ultimately undone from within.

but I disagree with just about everything else. For example:

After the U.S. withdrawal from Iraq in 2011, and especially after the 2015 nuclear deal (the Joint Comprehensive Plan of Action, or JCPOA), Iran became confident that the United States had neither the means nor the will to challenge it for control of the Middle East.

I am agnostic as to whether Iran wants to “control the Middle East” but I certainly don’t want to do so and I don’t believe that most Americans want to control it, either. The emphasis of U. S. policy should be to mitigate the risks of a perennially out-of-control Middle East. Or this:

This requires confronting and raising the costs of Iran’s imperial project, not just those actions that threaten only American lives and assets. The United States must keep up the attacks against Iranian assets in the region and join Israel in rolling back Iranian aggression.

U. S. policy is rightly directed towards defending American lives and assets not controlling the Middle East. And there are multiple risks in “confronting” Iran, especially for an America that is tired of war. Among these are inspiring Iranians who otherwise might be predisposed in our favor to “rally ’round” the mullahocracy through patriotism. And our too cozy a relationship with Israel is actually an impediment to Iranian regime collapse rather than an asset. Israel is if anything less popular within Iran than the mullahs.

In my view we should maintain our sanctions regime against Iran, encourage our allies to do the same, and do what we can to insert wedges between Iran and its proxies or allies. And whatever became of soft power? I strongly suspect more young Iranians aspire to the things we want than to those the mullahs want. We should promote that. Less of the apocalyptic talk would probably be helpful as well. Otherwise strategic patience is probably our best posture. The mullahs will undermine themselves more effectively than we ever can.

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Mismatch

I am still trying to figure out how those for whom climate change is the most important issue of the day plan to accomplish their goals without impelling China to change its behavior. Consider this from a piece by Chuck DeVore at Forbes:

In the U.S., the state of California and climate activists celebrated the closure of the Navajo Generating Station in northern Arizona, one of America’s largest coal-fired power plants, and the Kayenta mine that fed it with 8 million tons of coal per year. Almost 1,000 well-paying jobs were lost in the heart of the Navajo and Hopi Indian reservations.

The U.S. mined 750 million short tons of coal in 2018 and is on track to produce about the same in 2019 — but that’s down from more than 1 billion tons per year a decade ago.

Meanwhile, in the People’s Republic of China, coal production increased 2.6% in the first half of the year, with coal mining capacity hitting 3.53 billion tonnes in 2018, equivalent to 3,891 million short tons, or a little more than five times the coal mined in America. The centrally planned Chinese economy expects to add 290 gigawatts of coal-fired power plants in the coming years, peaking at 1,230 to 1,350 gigawatts of power.

Today, China’s coal-fired electrical generating capacity stands at about 1,000 gigawatts and climbing, more than four times America’s 236 gigawatts (which is declining). In fact, China is planning to add more coal power (290 gigawatts) than the U.S. currently produces (236 gigawatts).

Pay attention to what the Chinese do, not what they say. There is no amount by which we can reduce our carbon emissions to compensate for the ferocious rate at which China is increasing its own. And the article doesn’t even mention the coal-fired power plants that Chinese companies are building outside China.

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Keep Your Powder Dry

Bobby Ghosh expresses skepticism in his piece at Bloomberg that the Iranian regime will be satisfied with their volley of missiles of last night:

More likely, the missiles mark the first salvo of what Khamenei has promised will be “severe retaliation” against the U.S. for taking out his favorite killing machine. Having encouraged millions of Iranians to come out into the streets to mourn Soleimani and demand vengeance, the Supreme Leader has painted himself into a corner. His description of last night’s strikes as “a slap in the face” of the U.S. will not fool his countrymen, and certainly not the families of the 56 killed in the stampede at Soleimani’s funeral.

Nor will it suffice for Iran’s proxy militias in Iraq, which have lost several leaders to American attacks in recent days, including Abu Mahdi al-Muhandis, deputy commander of Iraq’s Popular Mobilization Forces.

He predicts additional attacks, both by Iran and its proxies.

If so, that will provide additional evidence about whether Iran is a rational actor or not. Or at least whether their reasons are the same as ours.

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Asking the Right Question

I think that Bianca Nogrady is asking the wrong question in her piece at The Atlantic. Here’s a snippet:

But what happens after the fires have passed through, and Australians return to either their intact homes or smoking ruins, dead cattle, a blackened moonscape where crops once grew? The lucky ones give thanks and get on with their life. The unlucky ones grieve, rage, shake their fist at Fate—and defiantly rebuild on the same ground. The battler spirit triumphs again, but for how long?

As the country suffers through one of its worst droughts on record, and heat waves shatter temperature records not once but twice within the same summer week, some are asking whether Australians can afford to keep returning to the same parched, scorched landscapes that they have occupied not just since the European invasion two and a half centuries ago, but for tens of thousands of years before that. Even before climate change, survival—particularly of agriculture—in some parts of Australia was precarious. Farmers were so often rescued from the very edge of disaster by long-overdue rains that arrived just in time. Now the effects of climate change are making that scenario even less likely, and this bushfire season and drought are but a herald of things to come.

She goes on to consider not just fire but heat and drought.

To my eye “How long will Australia be livable?” is the wrong question. Much better questions are “What is the carrying capacity of the land?”, “What is the cost of adding people beyond that carrying capacity?”, and “Who pays?”.

These are not just questions for Australia but for the United States as well and history can be a guide here. There are parts of the United States that have had substantial populations for millennia—New York City, Boston, and coastal Virginia. St. Louis and its environs was the most highly populated region in North America north of Mexico with a population in the tens or hundreds of thousands. By comparison when the Spanish arrived in the area that would become Los Angeles County, the entire population was in the hundreds.

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President Sanders?

Meanwhile in his Wall Street Journal column Jason L. Riley explains how Bernie Sanders could become the Democratic presidential nominee:

Bernie Sanders significantly outraised his Democratic presidential rivals in the final three months of 2019. He is very much in the hunt for the first three contests of the primary season. He has run second, behind Joe Biden, in national polls for most of the past year and matches up better head-to-head against President Trump than either Elizabeth Warren or Pete Buttigieg. When Sanders supporters complain that the political press isn’t giving their guy the attention he deserves, they have a point.

Odds are that the Vermont senator won’t be the next president, but it isn’t out of the question. The RealClearPolitics polling average has him leading in Iowa and New Hampshire and less than a point out of second place in Nevada, the third contest. If he were to win a couple of these early races, he could lose the fourth in South Carolina, where he trails badly, and still have some momentum going into Super Tuesday on March 3.

How he could beat Joe Biden:

Right now, black voters are solidly behind Mr. Biden, not only because he was Barack Obama’s vice president but also because they believe he can beat Mr. Trump. Should Mr. Biden stumble, it’s anyone’s guess where they might turn.

How he could beat Elizabeth Warren:

When it comes to Ms. Warren, the issue for black voters may boil down to her character, and here Mr. Sanders has the advantage of sincerity and consistency. By contrast, Ms. Warren raised millions from wealthy people to run for office and now denounces others who do the same. She sent one of her two children to a private school but wants to limit the choices for low-income families who lack her resources. She spent her adulthood posing as a Native American to advance her career by taking advantage of policies designed to help racial minorities. Mr. Trump thinks this is a laugh line, but black voters might not find it so funny.

How he could beat Pete Buttigieg:

James Clyburn, a black congressman from South Carolina, told CNN in November that blacks are ambivalent about Mr. Buttigieg because he is openly gay and many older blacks still hold socially conservative views about homosexuality. “I know a lot of people my age who feel that way,” said the 79-year-old Democrat. “I’m not going to sit here and tell you otherwise. I think everybody knows that’s an issue.”

What he’s not taking into account is the Democratic leadership. You must understand that the entire primary system is set up so that the leadership casts the deciding vote and I am highly skeptical that they will allow Bernie Sanders to become the nominee for two reasons. The first is that was their modus operandi the last time around. Have things changed enough since 2016 that they won’t pull out all of the stops as they did then to prevent his becoming the Democratic nominee? I just don’t see it.

The second reason is that is would be an extremely risky move and I don’t see the leadership as risk-takers. Bernie Sanders is not a Democrat. Nominating him would be the equivalent of saying “we don’t really care whether you’re a Democrat or not” which has not been their view to date.

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We Don’t Know

In his Wall Street Journal column for today William Galston asks three questions about the situation with respect to Iran:

  • Will the president’s action lead the Iraqis to rescind authorization for the presence of U.S. troops in their country?
  • Will Iraq’s Shiite militias declare open season on American forces?
  • Will the threat of all-out war deter the Iranian government from massive retaliation against American forces and allies?

The answer to each, of course, is that there are a lot of moving parts and we just don’t know.

If you want to send a message, use Western Union. If at this point we need to demonstrate how tough we are or that we are willing to use force, further lessons are futile. They simply won’t be learned.

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If I Were

I do not believe that Soleimani should have been killed. I do not believe that we should respond to the Iranians’ response. Sometimes it takes more courage to hold your fire than to fire.

However, if I were going to respond to the missile attack, I would degrade Iran’s command and control facilities systematically and then go after their oil production facilities, minimizing the loss of life while maximizing the damage to the Iranian economy.

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Has He Not Heard the News?

I didn’t what this piece from A. Gary Shilling at Bloomberg to go by unremarked upon. More than anything else it’s a good example of how weak most writing about our health care system is. Here’s his explanation for why our system is so expensive:

Medical costs are understandably high since the system is designed to be the most expensive possible for four distinct reasons. First, with the constantly improving but increasingly expensive modern technology, the best is none too good when your life or mine is at stake. Also, few patients have the knowledge to decide whether a recommended procedure will be medically much-less cost-effective. The medical delivery system encourages a gulf between the providers who supposedly know what’s needed and their patients who don’t.

Second, patients are quite insensitive to costs since their employers or governments pay most health care bills. And those who are privately insured want to get their money’s worth from their premiums, especially since Obamacare does not allow insurers to set premiums on a health risk basis.

Third, the pay-for-service system encourages medical providers to over-service. After my dermatologist burned off the pre-cancerous growths on my face, he wanted me back in two weeks to be sure, but also to bill another office visit.

Finally, domestic training programs and facilities for medical personnel are inadequate. As a result, many MD residents and nurses come from abroad, while medical schools of dubious quality in the Caribbean train U.S.-born physicians.

and here’s his prescription for fixing it:

To control costs on the demand side, use the appeal of money. The importance of their health to most Americans means they will spend proportionally more on medical services than other goods and services, but they’ll think twice if it’s money they otherwise can keep. Increasing deductibles and co-payments are moving in that direction. In 1999, employees on average paid $1,500, or 22%, of $6,700 in family health coverage premiums, according to the Kaiser Family Foundation. The total rose to $26,600 in 2019, but employees’ share has climbed to $6,000, or 29%.

Medical savings accounts also make patients more aware of costs. Companies give employees a set amount of money and they can keep what they don’t spend on health care.

Let’s talk about his prescription first. AFAICT the connection between the reasons our system is expensive is pretty tenuous. For example, how does it address the cost problems if any introduced by foreign-trained professionals? And is he completely unaware how much of the demand in our health care system is provider-induced?

And the pilot programs that have been tried along those lines have not been successful: people economize on necessary as well as unnecessary care.

My opinion of the reasons for why our system is so expensive is:

  1. It’s about what you would expect from a system in which 60% of the total is paid from taxes and the same people determine prices, the need for treatment, and the course of treatment.
  2. People aren’t exposed to prices and don’t have incentives to economize.
  3. We are a very large country and the point at which decreasing costs to scale was reached was at a much smaller population.
  4. Everything our government does is more expensive than anywhere else in the world.
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