Friday, November 16, 2007

Public Employees and Democrats

Michale Barone:
Here is my Creators Syndicate column for the week on the public employee unions and their enormous influence in the Democratic Party. I decided to write it because I think this influence is not widely understood and is certainly not much commented on. But the public employee unions exert enormous upward pressure on state and local government spending and enormous downward pressure on the accountability of public employees. Over time this will tend to increase the share of the economy devoted to state and local government spending, with significant macroeconomic effects. Nearly half of American union members are public employees—a vivid contrast with mid-century America, when only a small percentage, perhaps on the order of 10 percent (I haven't looked it up lately), of union members were public employees. And of course public employee unions are financed by the taxpayer: Their income comes from members' dues, which come from their salaries, which come from the public purse.

False Dichotomy in the Income Inequality Debate

Josh Hendrickson:
...the most frequent solution to income inequality, and the one advocated by [Paul] Krugman in nearly every interview about his book, is higher taxes on those at the top of the income scale. While this may give the appearance of lessening inequality, in actuality it does very little. Essentially, it is equivalent to twisting the ankle of the fastest runner in the world in an attempt to make other runners faster. In no way does this make other runners faster.

...income inequality is a static measure of well-being. Looking at an individual's or group's share of income at a given point in time tells us very little. In fact, even looking at the trends in income inequality is futile. The fact that individual's rarely remain in the same income group throughout their lives suggests that looking that a group defined as "poor" or "middle class" or "rich" is irrelevant...income inequality is a poor measure of prosperity. In reality, economic growth and innovation will do more to help the poor and the middle class than any conceivable government policy.

Thursday, November 15, 2007

Don't Oversimplify the "Cost" of War

James Pethokoukis:

The Democratic study on the "real costs" of the wars in Iraq ($1.3 trillion) and Afghanistan ($300 billion) from 2002 through 2008 will almost assuredly lead to a common perceptual pitfall. An explanation: Let's assume that the numbers on Iraq are more or less accurate. And let's stipulate for a moment that when you take into account "hidden costs" such as interest payments on new debt to pay for the war, the expense of long-term healthcare for our injured warriors, and the impact of higher oil prices, the total cost of Iraq is indeed twice what the White House has requested from Congress.

Should we then assume that by not waging the war, Uncle Sam would be a trillion dollars to the better? That would be a questionable assumption, a product of a sort of "static analysis" that assumes if you change one critical factor, all the rest stay pretty much the same.
But if we didn't go to war, then we probably would have kept up the containment policy.
... a containment policy would cost anywhere from $350 billion to $700 billon. Now when you further factor in that 1) a containment policy might also have led to a higher risk premium in the oil markets if Iraq was seen to be gaining in military power despite our efforts to box it in, and 2) money not borrowed and spent on Iraq might well have been spent on something else given the White House's free-spending ways...