Credit Confusion

As I write this, the Congress is preparing to pass a bill that would place restrictions on the ability of people to get credit. Personally, I have mixed feelings about the bill. On the one hand, when you make it harder for (mainly poor) people to get credit cards, you encourage them to turn to less savory means of obtaining credit. On the other hand, it’s at least arguable that some of the common irrationalities demonstrated by behavioral economics are present in the credit card market (whether the bill will actually address these problems is another story). And then there’s this.

But I don’t really want to argue about the credit card bill. Rather, I wanted to note an odd premise that both the pro and anti credit bill folks seem to be relying on in making their respective cases.

Israel and Laissez Faire

In the course of one of his magnificently twisted rambling posts, Mencius Moldbug* addresses the Israel/Palestinian conflict, and specifically the claim that U.S. foreign policy is unduly influenced by the “Israel lobby”:

Which side of the Arab-Israeli conflict does the US support? Obviously, both are “special interests,” and an easy way to tell whose pull is stronger is to see whose side USG favors.

There’s a wrong way to answer this question and a right way. The wrong way is to start by asking: what should US foreign policy in the Middle East be?

Having answered this question, we can define the answer as the “center,” and then compare what USG’s policies are to what they should be. Ie, if USG’s policies are more pro-Israeli than the center, the pole is tilted to the right, and the Israel lobby must be stronger. If USG’s policies are more pro-Arab than the center, the pole is tilted to the left, etc, etc.

This procedure is not useful because, to answer the question, we must first judge the dispute . . .But this judgment is not relevant to the problem at hand, namely, ascertaining objectively which lobby is stronger.

Sola Scriptura and the Constitution

Conservatives who advocate originalism or textualism when in comes to interpreting the Constitution are sometimes accused of advocating a “sola scriptura” view of the Constitution. Since such charges are typically made by Catholics to Catholics, the allegation has a certain sting to it, as if holding a particular theory of constitutional interpretation someone made one a bad Catholic.

Yet there needn’t be anything inconsistent about interpreting the Constitution in one way and the Bible in another. The Bible is the inspired Word of God, given to us for the salvation of souls; the Constitution is a legal document. What’s sauce for the goose ain’t necessarily sauce for the gander in such a context.

In any event, it’s not clear to me exactly what it would mean to have a sola scriptura view of the Constitution (which for sake of flourish I shall call the sola constitutionola view), or what is supposed to be objectionable about it. Presumably the idea is that sola constitutionola is to the Constitution what sola scriptura is to the Bible. Okay, so what’s sola scriptura? According to the Missouri Synod, sola scriptura is the belief that:

The Bible is God’s inerrant and infallible Word, in which He reveals His Law and His Gospel of salvation in Jesus Christ. It is the sole rule and norm for Christian doctrine.

By parity of meaning, then, sola constitutionola would be the view that the Constitution is inerrant and infallible, and that it is the sole rule and norm for legal doctrine.

If this is what sola constitutionola means, then no originalist believes in it and it is silly to suggest otherwise. No one says that the Constitution is inerrant and infallible; nor do originalists think that the Constitution is the only legal authority. They are perfectly willing to recognize other sources of law, such as state and federal law, treaties, etc.

What view, then is sola constitutionola supposed to mimic? Is it the view that the meaning of the Scriptures does not change over time? If so, then I fail to see what is objectionable even from a Catholic perspective.

Originalism is the view that the Constitution ought to be interpreted according to its original public meaning, i.e., the way the text would have been understood at the time of ratification. So far as I know, no Protestant believes something analogous about Scripture. All Christians believe, for example, that many passages in the Old Testament refer to Christ, yet pretty clearly they would not have been understood by the general public to refer to him when originally written hundreds of years before his birth.

The Constitution is a public document ratified by a large number of people and subject to much debate before hand – that it could have a secret meaning is unthinkable. The Scriptures, by contrast, are inspired by God and everyone accepts that they contain many mysteries. The same goes for the view that Scriptures are to be interpreted according to their plain meaning. I highly doubt that the Constitution has a spiritual sense.

I admit I am not nearly as clear on this issue as I would like to be, but as far as I can tell, the doctrine of sola constitutionola is either plainly false or perfectly acceptable.

Stagnant Thinking III: Where to Begin

In my last post I noted that while the real median income for all workers in up more than 30% over the last 35 years, the real median income of White men isn’t much higher than it was in the early 1970s. In describing this phenomenon, I have spoken of wages being “flat” or “stagnant.” This is the common way of speaking about the matter, but it is inaccurate. To say that wages for a given group were “flat” or “stagnant” during a given period implies that they remained largely unchanged throughout that period. But the fact that wages are more or less the same at the end of a given period as at the beginning doesn’t mean that they have remained unchanged throughout that period, anymore than a roller coaster must be flat because you start and stop at the same point.

Indeed, if we take another look at the Census Bureau’s Historical Income Tables, what we find is that wages (even for White men) have been anything but stagnant over the last 35 years. In actuality the real median income for White men fell nearly 10% between 1974 and 1982, only to rise 15% from 1982 to 2007. In addition, real median income for women increased only slightly between 1974 and 1982 and actually fell slightly for blacks during the same period. (If you are wondering why real wage growth was so bad between 1974 and 1982, you might want to check out my review of Robert Samuelson’s The Great Inflation and Its Aftermath).

This is important for two reasons. First, many people who cite the “stagnant” wages figures often attempt to lay the blame for this apparent stagnation at the feet of Ronald Reagan and his conservative heirs. Ronald Reagan, however, did not become president until 1981, and while his policies are open to criticism on a number of grounds, he did not have access to a time machine, and his actions as president can’t be blamed for what happened in the 1970s.

More importantly, if real median wages really were flat throughout the period of 1973/74 to the present, one might want to search for ways to get them growing again. If, on the other hand, real median wages have been growing since the early 1980s, and only appear flat because of real wage decline in the 1970s (due to policies since corrected), then there is less of a reason to go looking for something in current policy that has caused wages to stagnate. To say this, of course, is not to say that there is nothing in current policy that is open to criticism, or that we shouldn’t try to get real wages growing even faster than they have been (if we can). It is only to express a preference for honesty when assessing social problems.

Stagnant Thinking II: The Price of Progress

As I noted last time, the claim that real wages have been stagnant over the last several decades is a common place among certain groups. But is it true?

A look at the Census Bureau’s Historical Income Tables shows that the median income for individuals was more than 30% higher in real terms in 2007 than in 1974 (from $20,230 to $26,625 in 2007 dollars). Of course, the fact that real median income for society as a whole is up 30% over the last 35 years doesn’t mean that real median income was up that much for all groups within American society. Breaking down data based on race and sex, what one finds is that while real median income for women roughly doubled in the period between 1974 and 2007 (from $11,687 to $20,922 in 2007 dollars) and real median income for blacks increased by nearly fifty percent (from $14,338 to $21,888 in 2007 dollars) the real median income for White and Hispanic men was virtually the same in 2007 as in 1974 (from $33,575 to $35,141 in 2007 dollars for Whites, $24,432 to $24,451 in 2007 dollars for Hispanics). No doubt if one was to focus on even more specific subcategories, one could find groups that where real median wages were doing even better or even worse than the above, but of course as a simply matter of statistics any subgroup you found doing worse would have to be more than balanced by other groups doing better (since real median wages overall are up 30+%).

Based on the Census data, then, one would have to conclude that the last 35 years have been a time of great progress if you were black or were a woman, but were not so great for White males. Indeed, one might be tempted to conclude that it is precisely because blacks and women have seen such progress over the last 35 years that the real median income of White men has remained flat. That is, until the late 1960s both blacks and women were subject to a significant amount of discrimination in the job market, both legally and socially. This discrimination meant that the wages of both blacks and women were significantly lower than what they should have been given their productivity. Since the late 1960s, however, this sort of discrimination has waned considerably (though it obviously hasn’t gone away completely), with the result that the real wages of blacks and women have risen to more closely reflect their true value to employers. The flip side of this, however, is that White males now face more competition from blacks and women, which serves to suppress the growth in their own wages.

Whether one views this trend as a good thing or not will, of course, depend on your values. A White supremacist, for example, would view the above trends with horror. Likewise, someone who tended to frown on women working outside the home might be inclined to focus on the lower growth in real wages for men, and discount the vast improvements for women as being relatively unimportant. I suspect, though, that most people would view flat wages for White men as being an acceptable price to pay for the increases in the incomes of blacks and women over the last 35 years, and so to the extent that the two trends are related, would be inclined to view the overall trend as being positive.

As it happens, I don’t think that the above is anywhere near the whole story when it comes to the issue of wage stagnation. That is, I think that the lot even of White men has improved a lot more than what simply looking at the Census numbers might lead you to believe, and in future posts I hope to explain some of my reasons for thinking this. Nevertheless, even if the above numbers were the whole story, the relatively flat wages of White males would be worth it, in my view, as the price of progress achieved over the last 35 years by historically discriminated against groups.

One final note. You might wonder: what about Hispanics? Clearly they weren’t the beneficiaries of discriminatory policies against minorities, so why should their wages be flat? My guess is that this is just a matter of statistical illusion. If you compare the median age of the children of the Octomom today versus a year ago, you will find that it has dropped considerably. But that obviously doesn’t mean that any of her children are younger today than they were a year ago. If you add a bunch of people at the bottom of an income distribution, it is going to exert a downward pressure on median income even if the income of each individual keeps improving. Given the large increase in HIspanic immigration over the last 35 years (most of whom are below the median in terms of income) it’s not surprising that real median income for the group would not have improved that much.

Stagnant Thinking: An Introduction

The recently canceled television series Life on Mars featured a somewhat unusual premise. The show’s protagonist, Sam Tyler, is a cop in present day New York City who, after being hit by a car, finds himself mysteriously transported back to the year 1973. The show was a strange blend of police drama and science fiction, as Tyler sought to undercover how he had ended up in the past, and whether anything that was happening to him was even real.

The premise of the show was, as I said, somewhat odd. But equally odd is that, according to plenty of pundits and commentators across the political spectrum, Tyler may actually have lucked out in being sent back in time. The reason for this, according to these commentators, is that once you account for inflation the material condition (or at least the wages) of the typical American are no better, and may in fact be considerably worse, than in the early in 1970s. The following snippet from a recent Bob Herbert column in the New York Times is typical:

As hard as it may be to believe, the peak income year for the bottom 90 percent of Americans was way back in 1973, when the average income per taxpayer, adjusted for inflation, was $33,000. That was nearly $4,000 higher . . . than in 2005.

Men have done particularly poorly. Men who are now in their 30s — the prime age for raising families — earn less money than members of their fathers’ generation did at the same age.

While the claim that the wages of the typical American have stagnated is most often found on the left, the idea is hardly confined to such quarters. Many libertarians have also been pushing the claim (though whereas those on the left tend to blame Reagan and “neoliberalism” for the supposed stagnation, among libertarians government is the natural culprit). I know that several of my co-bloggers have also made some version of the claim at one point or another.

Stop the Presses: Vatican Gives Positive Review to Angels and Demons

Well, sort of. If you read past the title of this Huffington Post piece on the subject, the review (from L’Osservatore Romano) doesn’t sound all that positive (I guess calling it “harmless” is kind of positive).

My understanding is that in Brown’s previous book, the Catholic Church was accused of murdering millions of women and of perpetrating the greatest conspiracy of all time in furtherance of its anti-women agenda. Whereas in Angels and Demons, the Church is the victim of a giant conspiracy, and is accused of having killed a few thousand people in furtherance of its anti-science agenda. So I suppose that’s progress.

The Rich Have More

There is an article in the New York Times Magazine by an American expat living in Holland about how having the government take more than half your paycheck isn’t as bad as it seems. It’s a pretty good article, and if America is headed in a more social democratic direction (as I fear we may be) then we would do well to look more towards the sensible policies of some more socially democratic countries, rather than the sort of populist demagoguery that is sometimes popular on the American left.

Anyway, what caught my eye in this piece in particular was the following bit:

The Dutch are free-marketers, but they also have a keen sense of fairness. As Hoogervorst noted, “The average Dutch person finds it completely unacceptable that people with more money would get better health care.” The solution to balancing these opposing tendencies was to have one guaranteed base level of coverage in the new health scheme, to which people can add supplemental coverage that they pay extra for.

Note that the third sentence contradicts the second. The Dutch find it totally unacceptable that the rich should get better health care than everyone else; that’s why they designed their system so that the rich could get better health care than everyone else.

Better Than Taxes

In the course of a recent post on Warren Buffett and the Efficient Market Hypothesis, Scott Sumner made the following aside:

Bill Gates essentially taxed middle class consumers all over the developed world, and is giving almost all of the money to the disadvantged in poor countries. That’s something governments don’t do, and yet for his “monopoly profits” he is despised by many on the left.

This prompted a hearty Amen from Arnold Kling, who added:

There is a huge contest going on between politicians and rich people over who should get to spend their money. Most of us have no direct stake in the outcome–as neither politicians nor rich people, we will not have the choice.

But I think we really ought to be rooting for the rich people. That is, we should root for lower taxes and less government spending. Government is one of the worst charities in the world. It advertises that it is going to give money to worthy causes, but very little money goes to programs that are aimed at people in need, and not many of those programs hit their targets. All of the bleeding hearts who are thrilled by the idea of government closing tax loopholes and taking more money from rich people should do an empirical analysis of who benefits from government spending and who benefits from the spending of rich people.

I’m not aware of any empirical analysis comparing the results of private charity versus government spending, but I suspect Kling is right that, dollar for dollar, you get more bang for your buck from private charitable spending than you do from government spending. If your average rich guy decides he wants to give away his money in the most beneficial way possible, he’s probably not going to just give it to the government, and I don’t think that’s just because he’s being foolish.

When Have You Changed Your Mind?

There is a famous quote, often misattributed to Churchill, that if you’re not a liberal at 20 you have no heart, but if you’re not a conservative by the time you’re 40 you have no brain. Given my political history, I’ve already shown myself to be heartless. Whether I shall prove myself to be brainless as well remains to be seen. To quote an magic eight ball: outlook not good. It did occur to me the other day, however, that despite not following the trajectory set forth above, I have changed my mind on a lot of political issues over the years. To give a very non-exhaustive list, at one time or another I have supported each of the following: