The appeal of austerity...and why it doesn't work

Photo by Pen Waggener

Reducing the debt is undoubtedly important. Roughly 6% of the federal budget is allocated each year to pay interest on our national debt. As deficits and debt increase, so too do our interest payments, which in turn limits resource allocations to other important areas (education, which is about 3% of the federal budget, comes to mind).

Austerity is an intuitively pleasing policy agenda because it relies on the simple mathematics of input and output. My issue with austerity isn't the end goal of debt and deficit reduction, it's that austerity is based on false assumptions and, most importantly, it doesn't work.

A recent study by Herndon, Ash, and Pollin entitled "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff" essentially calls bullshit on the austerity endeavor.

In 2010, Harvard economists Reinhart and Rogoff published a set of studies that found when the public debt-to-GDP ratio exceeds 90%, economic growth comes to a grinding halt. Herndon and company found a number of issues with Reinhart and Rogoff's study worth mentioning. If your pressed for time or need a laugh, here's Colbert's take on it:


First, there are a number of gaps in data from the countries studied, largely stemming for varying start points for data collection. These gaps led to the selective exclusion of 14 data points at which varying countries experienced over 90% in the debt/GDP ration.

Second, an Excel coding error meant that Australia, Austria, Belgium, Canada, and Denmark were completely excluded from analysis. Go ahead and read that sentence again.

Finally, the data was weighted equally by country rather than by combining the country and year, an odd choice that Reinhart and Rogoff did not explain. According to Herndon and his colleagues, "equal weighting of country averages entirely ignores the number of years that a country experienced a high level of public debt relative to GDP."

All of these errors lead to bogus results which Herdon, Ash, and Pollin refute:

Our most basic fi nding is that when properly calculated, the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0.1 percent as RR claims. That is, contrary to RR, average GDP growth at public debt/GDP ratios over 90 percent is not dramatically di fferent than when public debt/GDP ratios are lower.

So a 28-year-old graduate student made respected economists look damn silly, which would be funny except for the fact that so much damage has already been done by Reinhart and Rogoff's work. Again, according to Herndon, Ash, and Pollin:

Reinhart's and Rogoff 's website lists 76 high-profil le features, including The Economist, Wall Street Journal, New York Times, Washington Post, Fox News, National Public Radio, and MSNBC, as well as many international publications and broadcasts. Furthermore, RR 2010a is the only evidence cited in the "Paul Ryan Budget" on the consequences of high public debt for economic growth. 

The only evidence for the leading economic mind behind Republican fiscal policy, Paul Ryan (and God knows how that happened), turns out to be fundamentally flawed. But the page one story of the Ryan Budget won't be undone by this page 16 retraction.

Moreover, austerity already has taken its toll, and for all the U.S. deficit hawk warnings that "we're headed down a path to Europe," those same European countries have arguably been more eager to adopt austerity policies than the United States -- and it's been disastrous. Even Ireland, the poster child for austerity economics, is having its doubts after budget cuts have wreaked economic havoc.

The problem we have isn't simply one of input and output, its understanding the difference between expenditures and investments. And since austerity minded policies tend to correlate with Republican leanings as do strength of religious beliefs, I'll illustrate my point with the biblical story of Joseph, son of Jacob.

Joseph was sold into slavery by his brothers and was eventually imprisoned in Egypt. There, he interpreted a dream of the Pharaoh and correctly predicted that seven years of bountiful harvests would be followed by seven years of famine. Joseph advised the Pharaoh to store up grain during the years of plenty to prepare for years of famine, which he did, and all was well in Egypt.

The moral of the story: shortsightedness is idiocy. We are idiots. We spent all our resources during times of plenty and landed ourselves in this proverbial famine. The solution is a Keynesian one: spend money from the public sector when the private sector is unwilling, which in turn spurs the economy.

This solution means taking on more debt, which is unfortunate, but it's the right thing to do. If we fail to make the necessary investments now, we'll be paying for those poor choices long into the future, much like we're paying for past failures now. What we need isn't a shortsighted solution, but rather one that accounts for inevitable cycles of boom and bust that capitalist societies experience.

The only hard thing about enacting such a policy is recognizing our historically poor decision making patterns and realizing that a something-for-nothing culture is not sustainable in the long term.

What is a terrorist?

Photo by Wally Gobetz

Most of us have been following the news coverage of the Boston Marathon bombings and the subsequent manhunt and arrest involving the Tsarnaev brothers.

Before Boston police or the FBI even had any suspects, the news coverage almost immediately described the bombers as "terrorists" or referred to the incident as an act of "terrorism." I thought that labeling was interesting not only because it felt so natural, but -- as a colleague of mine also pointed out -- because the coverage disturbingly lacked any context surrounding these highly connotative terms.

So, as I often do, I began with denotative definitions. First, terrorist:

"a person, usually a member of a group, who uses or advocates terrorism"

Tautology. Great. So terrorism then:

"the use of violence and threats to intimidate or coerce, especially for political purposes"

When I see the Tsarnaev brothers, I don't see terrorists, only men who have committed an incredible atrocity and should be punished for it. They aren't members of any group, they don't appear to have deep political motives, and their actions don't seem to be exceptionally well planned.

To that end, I was glad to hear that Dzhokhar Tsarnaev would not be tried as an enemy combatant, but rather in the civilian court system. He is a naturalized U.S. citizen who committed crimes in the United States and was arrested in the United States. He is a criminal, not a combatant, and choosing to put him on trial as such sets an important example and precedent for the future.

This precedent is paramount because we live in the midst of the "War on Terror," itself a misnomer. Wars are implicitly winnable, but our current approach of fighting semi-systematic violence with systematic violence will never end. Wars end when one side grows tired of fighting, lacks the ability to continue fighting, or are all dead. The U.S. military is incapable of victory with such terms. Terror will never be defeated, only managed.

It's also important to point out that all acts of violence are meant to intimidate or coerce, but terrorism has a distinct meaning in the public mind as a specialized form of violence. It's systematic, theocratically and religiously motivated, and carried out by Arab Muslims.

That is not was terrorism is, but that is what terrorism means, and to evoke that so readily and without context can have dangerous consequences for a nervous, frightened, angry, and trigger-happy people already living in a seemingly constant state of violence and war. My message to the news media is simple: in future, exercise more cautious word choice, because language has more power than we often realize.

Gun control a non-issue issue?

I'm not sure it's even worth my time to articulate a position on gun control itself, but I'm gonna. More importantly, however, the debate raises other questions that merit closer inspection.

The Pew Research Center had several interesting findings concerning the public's general attitudes toward gun policies, rights, and control. As you can see from the above chart, background checks, better tracking of sales, bans on semi-automatics and high capacity magazines, and restrictions on the mentally ill (whatever that means) are popular measures of control.

Not surprisingly, Obama's gun control policy largely adheres to prevailing public opinion.

I suppose I'm in favor of these measures, but I'm a realist and there are few points about these proposed laws I'd like to make:

1. Gun owners won't be affected in a meaningful way.
2. Mass shootings won't stop.
3. Shut up about the 2nd Amendment.

To the first point, I say "meaningful" because we'll get to keep our guns and enjoy the rights they afford us. So maybe you can't deer hunt with an AR-15 and a 20-round magazine, but you can still deer hunt with other powerful weapons not originally manufacture to efficiently kill human beings. As far as home defense, the same applies. Truthfully, a 12-gauge shotgun is probably your best bet there anyway.

To the second point, mass shootings will still happen. People will still die. The only benefit is that assailants would be less efficient at killing under the proposed controls, so theoretically the death tolls would go down. We wouldn't have done anything to change the underlying causes of such violent behaviors, only the tools available by which such behaviors could be carried out. That's the exchange we'd be making and it's important to understand that.

And finally, because these atrocities will likely continue, most of what I here about the argument involves whether these proposed laws would infringe on Constitutional rights. 

But what exactly are those rights?

So let's talk about the Constitution. I do not believe that the 2nd Amendment guarantees a right to individual gun ownership, and understanding the history behind the Constitution's ratification is important to my conclusion. 

The major point of contention during the Constitution Convention was the role of the federal government. The federalists favored a dominant federal government while anti-federalist wished to see more power rested with the states. Because the Constitution originally outlined what the federal government could do, not what it was forbidden to do, the anti-federalist successfully pushed for a Bill of Rights intended to protect the states and their citizens from a powerful federal government.

The second of these first 10 amendments reads as follows:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

In the late 18th century, the United States did not field a strong standing army. It was either weak or nonexistent, making the role of state militias important not only for state but federal defense.

It seems clear to me that this provision applied to our protection against foreign invaders and from federal tyranny by state organized military forces, not to the protection of individuals' recreational gun ownership.

But I don't think the framers' intent means a damn thing. As Thomas Jefferson once said, "The earth belongs to the living, not the dead."

The Constitution is a beautiful founding document with amazing guiding principles, but's it's a living document and we aren't bound to it. If we were we wouldn't have changed it 27 times. Simply because a handful of revered, rich, middle-aged, white, and -- most noticeably -- dead said so over two centuries ago doesn't make it true. That is our grand national naturalistic fallacy and it's time we get over it.

If we truly believe that disobeying the document in this current age is more prudent than following it, then disobey we should. Constitutional disobedience, after all, is our true founding principle.

But obey or not, it is critically important to realize that our Constitutional rights are not, nor have they ever been, absolute. In 1798, Congress passed and President John Adams signed the Alien and Sedition Acts, which essentially outlawed critiques of the government -- this just seven years after a Constitutional guarantee or free speech.

To this day many of our Constitutional rights are highly regulated and often ignored. The Patriot Act, signed into law by G. W. Bush and reauthorized under Obama includes blatant violations of 4th and 6th Amendment rights protecting against warrantless searches and guaranteeing public trials -- damn good amendments.

But nobody seems to give a shit about those violations, which are infinitely more important to our daily securities than any gun. It's ironic that, while we've largely been able to protect the right to bear the very arms meant to defend ourselves from government oppression, we've managed quietly to sign away our most important freedoms with one hand, all without moving our trigger finger.

Is it finally time for a conversation about guns?

Well, if not now, when? Anytime there's a high profile gun crime, we're sold this line about the importance of mourning and that politicizing the event to further a gun control agenda is improper. I think The Washington Post's Ezra Klein has a good take on this strategy:

Let’s be clear: That is a form of politicization. When political actors construct a political argument that threatens political consequences if other political actors pursue a certain political outcome, that is, almost by definition, a politicization of the issue. It’s just a form of politicization favoring those who prefer the status quo to stricter gun control laws.

Jon Stewart and the folks over at The Daily Show had a similar take, though a bit more biting in its satire:

The Daily Show with Jon Stewart
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So to hell with this false decorum. Let's have a little dialogue.

As the Pew Research Center reports, support for protecting gun ownership rights is actually on the rise, despite the recent shootings in Colorado and now Connecticut. My guess is that reflects a desire to protect the right to own guns, not necessarily an opposition to stricter laws about the nature of gun ownership.

Americans do support some restriction, particularly on felons and the mentally ill, which ties in closely with background checks.

Federal background checks for firearm purchases stem largely from the Brady Act, implemented in 1994.

Unfortunately, that act only requires licensed dealers to conduct background checks. Private sellers aren't covered under that legislation, meaning many guns bought and sold at gun shows or online are sold without any meaningful paperwork. 

Simply put, gun laws haven't even caught up with the widespread public use of the Internet, which started almost two decades ago. 

I'm not saying we should ban guns all together. Hell, I own a gun. Still, I think there are some things we should consider. Obviously extending background checks is one. Limiting the sale of handguns, assault weapons, and high-capacity magazines are others. Requiring licensing and education for gun owners are others.

These are conversations that, as adults, we should at least be able to have -- even if we choose to take no action. But for some reason we can't even get that far. It's truly a sad state of affairs, and unless we find some way to address potential systemic causes of these mass killings, that sate of affairs will likely continue.

If you're interested in pressing Congress and The White House on beginning a gun control conversation, there are several petitions you can peruse and sign if you're so inclined. Thoughts and prayers only go so far, and action always goes further.

The Feasibility of Secession

Recently The Huffington Post reported on 34 states that had signed petitions to secede from the United States following Obama's reelection. 

Apart from the general silliness of the idea, the reasoning for why such a thing is feasible struck me. Consider the following from the Texas petition:

"Given that the state of Texas maintains a balanced budget and is the 15th largest economy in the world, it is practically feasible for Texas to withdraw from the union..."

Assuming a balanced budget and fiscal responsibility provides reason to secede (which it doesn't), let's see how all the offending states fare.

State	Federal Spending per $1 Paid in Federal Taxes
Mississippi	$2.02
Alaska	$1.84
Louisiana	$1.78
West Virginia	$1.76
North Dakota	$1.68
Alabama	$1.66
South Dakota	$1.53
Kentucky	$1.51
Montana	$1.47
Arkansas	$1.41
Oklahoma	$1.36
South Carolina	$1.35
Missouri	$1.32
Tennessee	$1.27
Arizona	$1.19
Kansas	$1.12
Wyoming	$1.11
Nebraska	$1.10
North Carolina	$1.08
Pennsylvania	$1.07
Utah	$1.07
Indiana	$1.05
Ohio	$1.05
Georgia	$1.01
Florida	$0.97
Texas	$0.94
Oregon	$0.93
Michigan	$0.92
Colorado	$0.81
New York	$0.79
California	$0.78
Delaware	$0.77
Nevada	$0.65
New Jersey	$0.61
Average	$1.21
Red Average	$1.38
Blue Average	$0.85

This table is based on 2005 data from The Tax Foundation, so it may be a bit outdated, but I think the point still stands.

Essentially, if the dollar amount on the right exceeds $1, that state is taking more federal funding than it contributes through taxation. I've ordered the table from greatest takers to greatest givers, or to borrow recent Republican lingo, entitlement states to job creators.

I've also color-coded the states based on their electoral college vote in the 2012 presidential election -- red for Romney and blue for Obama. Not surprisingly, two-thirds of the secessionists went for Romney.

On average, these states take in $1.21 of federal funding for every $1 in tax revenue provided. However, the Democratic leaning states receive $0.85 of federal money on the dollar while the Republican leaning states receive $1.38. 

Texas is the only red state that's actually in the black, while Pennsylvania and Ohio (notable swing states) are the only blue states in the red.

The point: for all the states' rights and small government machismo, red states don't seem to have a problem cashing a federal government check. If I were most of these states, I'd think twice on this one. And Texas, best of luck. Third time's a charm.

A real debate on Obamacare

The Obamacare debate may be the most egregiously dishonest thing I've seen in some time.

Consider this Reuter's poll from June: people dislike Obamacare, but they like it's provision.

All this really means is that when the program is described accurately, it rates well, but typically it's misrepresented as a socialist government takeover. This false debate point on Obamacare (looking at you Mitt) is dangerous and insulting.

Normally I find similar misrepresentations mildly annoying, but I've always felt that the health care issues should be treated with more respect. Health care is serious for obvious economic and moral reasons, so let's treat it as such.

Despite his opposition, Romney's Massachusetts administration is arguably the architect of Obamacare. Not surprisingly then, Romney appears to like many of the provisions:

• Eliminating lifetime maximums
• Eliminating bans on those with pre-existing conditions
• Allowing kids to stay on their parents plan until age 26

In last night's debate, I heard no real objection from Romney concerning the individual mandate either, which is arguably both the linchpin of the program and its most hotly contested and least popular aspect. Just ask John Roberts.

Romney criticized Obamacare on two main points. The first is that it "put in place a board that can tell people ultimately what treatments they're going to receive." This statement is simply untrue. The Independent Payment Advisory board to which Romney refers does not have to power to ration health care as he implies.

The second point is that Obamacare drives the cost of insurance up resulting in job loss. This claim is also shaky. Premiums have gone up, but benefits have as well. Moreover, large group plans have seen almost no change in premiums and small group plans have seen only modest change. Obamacare is not a likely job killer because of added premium cost.

However, so long as insurance operates as a for-profit industry -- which I believe is immoral -- insurance companies have a moral responsibility to generate returns for shareholders. Adding new people to the insurance coffers probably means adding the sickest among us who had no access to health care before, and those added payouts will change how insurance is provided in order to maintain profit.

My guess is that the trend in recent years of replacing PPOs and HMOs with high-deductible plans will continue. In short, you'll be covered and get group rates, but if you need to be hospitalized for any reason, count on dropping around $2,500+ out of pocket in addition to your premium.

If you want to attack Obamacare honestly, this cost shift is where you do it.

Still, regardless of the election result I don't see repeal as likely. And frankly I welcome a large scale shift to high-deductible plans because it will finally force us to a fundamental decision about health care: Should insurance be a private good for corporate profit?

If the answer is yes, then our choice will likely be between high-deductible plans for all or dropping the chronically ill from coverage in order to maintain private profit at public expense. After all, that's what these cost shifts represent.

If the answer is no, then we will likely face a more progressive public-sector approach to health care reform as opposed to the conservative private-sector approach of Obamacare.

The Heart of a Fan

I love college basketball, in particular the University of Louisville. I love it so much that it's probably unhealthy -- or maybe so much that it actually is healthy.

A friend recently criticized me for, when talking about U of L basketball, using the word "we" because I haven't done anything to create successes or failures for the program. I could probably make a counterargument about the importance of fan support, but I generally accept the criticism. I have no direct impact on whether the team wins.

Still, it got me thinking. I can remember a game a few years back that I watched with my dad. U of L lost and we were both a little drunk and pretty upset. After awhile, he leaned over and said, "You know, it's pretty stupid to get so worked up over something like this."

I think the sentiment of the two comments is the same. But I'm not apologizing for it, as we (U of L) are in the Elite 8, one game away from a Final Four and a potential match-up with rival Kentucky.
Needless to say I'm excited. But I've never played a single game in a U of L jersey; I couldn't even make my high school team. And yes, maybe I'm not a part of the program's successes or failures, but they are certainly a part of me.

After 26 years of attending games and cheering on the Cards, I think those successes and failures are arguably as much or more a part of me than they are of anyone currently playing, and I think the same goes for a lot of long-time fans.

Louisville is an interesting place. There's a lot of diversity here, and while there are several transplants, many of the citizens are born here, live here, and die here without every truly having left. U of L sports, particularly basketball, are a cornerstone of the community, a common thread (and the same is true of UK, though I hate to admit it). I don't mean to say that I live completely vicariously through the team, but there's a sense of community, connectedness, and camaraderie in their achievements that's just not there in any personal triumph.

Sport brings that out in people. Consider the Dodger's 1958 move from Brooklyn to Los Angeles. Brooklyn was devastated, and not just because they struggled through half a century of loss to finally win the World Series and 1955 just to have the team ripped away three years later. The loss of a common community bond was simply crushing. The borough gradually became absorbed into New York and lost that much more of its identity, independence, and unique spirit.

I feel much the same way about the Louisville Cardinals. It's just a part of who I am, from a personal level to a community level. In truth there's no apologizing for co-opting the team as my own because there's nothing I can do about it. I'll be rooting for us through victory or defeat, but like Dodger fans of old, I'm just hoping this isn't another "wait 'til next year." Louisville fans have seen to many of those...26 straight to be exact.