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.

Let’s start with the pros. Here’s Ezra Klein, writing in the Washington Post:

The credit card industry, in recent years, has developed something of a tiered model. Good customers are treated extremely well. There are rewards programs, favorable terms, and high limits. But those who don’t prove as assiduous about their bills, or slip up amidst their payments, fall into a second tier that’s as punishing and deceptive as the first tier is serene and straightforward. Hidden fees, unexpected rate increases, universal default, and all the rest. The result is that low income credit card holders effectively subsidize high income credit card holders.

For the case against the bill, we have to turn to that notoriously right-wing rag, the New York Times:

Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”

As Bryan Caplan notes, the argument made by the credit industry folks doesn’t make much economic sense: “When you make lending to high-risk people less attractive, the result is not worse terms for low-risk people who have been profitable all along. The result is that high-risk people get less credit. They used to be able to get credit despite their credit-unworthiness by paying extra; if the law forbids this, why lend to them?”

Caplan is right, but by the same logic Klein’s claim that high risk borrowers are subsidizing low risk ones seems rather dubious. If people who always paid their credit cards on time were a drain on credit card companies’ profits, you would expect them to try to deny credit to such people, or at least offer it to them on less favorable terms. You certainly wouldn’t expect those companies to go out of their way to attract these very customers by offering them “rewards programs, favorable terms, and high limits.” The idea that if everyone who paid their credit cards on time were denied credit those who didn’t pay on time would get more favorable terms doesn’t make much more sense than saying car insurance companies would benefit if they only insured people who got in accidents, because then they could increase people’s rates.

The idea that lenders benefit when people don’t pay them back on time is one that is attractive to a lot of people (see here for a related discussion). Partially this may rest on an implicit zero sum fallacy; paying late is clearly not to the benefit of the borrower, so people assume that it must be to the benefit of the lender. Mainly, though, I think it’s an example of the seen and unseen. The benefits that credit card companies get from having people use their cards wisely (e.g. intercharge fees) tend to be invisible to consumers, whereas the money they pay in late fees and interest is highly salient.

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.

So the right way is to start with an objective question: if USG’s involvement in the conflict were to cease, which side would benefit? If the answer is “the Palestinians,” USG’s involvement must logically favor Israel, and thus the Israel lobby is stronger. If the answer is “the Israelis,” vice versa. This procedure produces an answer without the need for any sort of judgment.

Looked at this way, Moldbug argues, the obvious if counter-intuitive answer to the question is that American foreign policy is objectively pro-Palestinian.

I tend to agree with Moldbug both on the procedure he uses to answer the question and on the answer that he gives. For this reason, I find claims that the U.S. needs to stop taking an uncritically pro-Israel approach to the conflict if it wants to advance peace to be somewhat baffling. Actually, it would be baffling even if you did think the U.S. approach was uncritically pro-Israel. If the Israeli and Palestinian leadership wanted an “honest broker” who would be more “even handed” in mediating the conflict there are plenty of places they could go to. That they do not do so suggests that (for whatever reason) the parties prefer pro-Israel America to any of the alternatives.

But I digress. What Moldbug views as a hypothetical to assess the bias of American policy, I see as a desirable policy in and of itself. The U.S., taking a page from Senator Aiken, should simply declare victory on the Israel/Palestinian issue and go home. That means no foreign or military aid to Israel or to the surrounding Arab nations. It means no diplomatic efforts to solve the conflict; no sanctions or security guarantees for either side.

To those on the right who urge the need to protect an ally, I would say: Israel can take care of itself. And if it can’t, if a Jewish state can only be maintained in the region with the assistance of other nations halfway around the world, then perhaps it’s time for the Jews to find somewhere else to live. If that sounds harsh, sorry, but the world’s a tough place some times. Talk about Israel’s right to exist is beside the point. No state has the right to exist. A state may defend itself, but if it can’t do so then it’s probably not long for this world.

To those on the left who want to talk about the plight of the Palestinians, I would say: Decades of diplomatic efforts have failed to bring about a resolution to the conflict. That ain’t likely to change any time soon. At about the same time Israel declared its independence, India was being split in two. As with Israel, this caused much bloodshed, and millions of people were forced from their homes. But sixty years later you don’t see a bunch of Bengali Hindus still living in refugee camps. There are plenty of people in the world who have it bad, and that no one cares about. Given that all our concern for the plight of the Palestinians has done nothing to actually improve their condition (and may have made matters worse) I see no reason to continue playing Sisyphus for peace.

* If you’ve never experienced Moldbuggery before, be forewarned that it can initially be a quite disorienting experience. Moldbug is a good stylist, but brevity is not his strong suit, and it can take a while to master his technical jargon (like our own MM, Moldbug is very down on calvinists, though he means something quite different by the term). Some of his views are also, shall we say, a little creepy.

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.

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.

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.

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.

Can this really be right? Is Sam Tyler better off, at least materially speaking, back in 1973 than he was in 2008? I don’t think so. To me, the claim that the typical American is no better off today than 35 years ago is initially implausible, and gets more implausible the more it is held up to scrutiny. To explain what is wrong with the claim, however, is not the work of an instant, and I recognize that the subject is a contentious one, with many different aspects. I propose, therefore, to do a series of posts on the subject, each looking at the issue from a different angle and articulating some of the reasons that I don’t think the stagnation story holds water.

I am, of course, only to keenly aware of how statistics can be used to mislead and obscure, rather than to clarify. As the sage Homer once put matters: “People can come up with statistics to prove anything; 14% of people know that.” To some extent this is unavoidable. I will, however, try to limit the chances of providing a misleading account as best I can. To that end, in what follows I will try as much as possible to use general statistics, rather than cherry picking narrow statistics that would seem to bolster my case. When you see someone trying to make the case for a general proposition using curiously precise or narrow statistics, chances are that the statistic being quoted is not representative of the larger picture, and hence is misleading.

I know that this can be contentious subject, but the response to my series of posts last year on the equally contentious subject of race gives me hope that it can be a productive endeavor.

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.

A list of some of the factual errors in the book version can be found in this post by John C. Wright (the style of which is just spectacular, by the way). Can it really be that Brown said in Angels and Demons that Churchill was a “staunch Catholic”? I mean, it’s one thing to get things wrong when it comes to Catholic theology, or French geography, or theoretical physics or whatever, but surely anyone with even a basic understanding of either Churchill’s life or of British politics would realize that doesn’t scan. Does Brown not have an editor?

One other random point: In the trailer, there is a scene where Tom Hanks demands access to the Vatican’s secret archives and is rebuffed by Church officials. Of course if you go to the Vatican’s website, there is a link off the main page called “Vatican Secret Archives.” I’ve always found that a little strange. I mean, I realize that the Holy See isn’t all that tech savvy, but I mean, come on. They should at least have it where you need to move the cursor over a random part of the screen to see the link.

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.

To quote Alec Baldwin’s character from a recent episode of 30 Rock. “Yes, important people get better health care. They also get better restaurant reservations, bigger seats on planes.” To which I might add that they get better police protection, better roads, congressmen are more likely to return their phone calls, and so forth. So yes, the rich have more. Also, there is no tooth fairy. I’m not saying you have to like the fact; but you should probably accept it and plan accordingly.

Nor is it much of an answer to say that we should build a society in which there are no rich people. Whether we’re talking about a socialist paradise like Sweden (where one family controls about a third of GNP) or a socialist distopia like North Korea (where, I hear, Kim Jong Ill manages to do quite well) every society will have its rich and poor, at least in relative terms. The rich you will always have with you. The main difference is that in Sweden (as in the United States) people generally get rich by meeting peoples needs, wants, and whims. In a free society rich people give us computers, cancer treatments, and Harry Potter, in exchange for which they get lots of money. Try and prevent people from attaining riches, and you very quickly find that everyone is having to do without.

This is why, despite all the rhetoric to the contrary, the Dutch have basically decided that it’s okay if people with more money get better health care, so long as everyone gets an adequate amount of it. In doing so they still face a trade off (as the article itself notes), and perhaps a better trade off could be designed. But at least they are going into it with their eyes open.

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.

Of course, the counter-argument here is that the rich won’t give nearly as much away voluntarily as they now pay in taxes. Even if private charitable contributions are (say) twice as effective as government spending, if the government wasn’t taking the money from them they would only give away (say) 10%, which means tax and spend is still a better deal, all things considered, than is relying solely on private charity.

This argument, however, is made plausible only by a failure of imagination. If we really wanted, we could easily design a tax system that would get us the best of both worlds. For example, if the rich currently give 5% of their money to charity and pay 25% in taxes, one could raise the effective tax rates on the rich to 30% but allow taxpayers to subtract a dollars’ worth of tax for every dollar donated to charity.

That, of course, would be taking things a little too far. Presumably there are some areas (defense?) where a dollar of private spending is less beneficial than a dollars’ worth of government spending, and one would not want to apply this sort of credit system to taxes used to support that sort of spending. On the other hand, I would be surprised if most government spending turned out not to fall into this category.

While I think that this sort of idea has a lot of promise, I don’t expect anything like it to be adopted any time soon (indeed, the Obama administration seems to be moving in the opposite direction). The reason, I think, has to do with who gets the credit for private spending versus government spending. Politicians like to brag about how much they’ve spent on program X, Y, or Z. Saying that you made it easier for Mr. Moneybags to spend more on X, Y, or Z doesn’t sound nearly as impressive, and a good deal of the credit for whatever good this spending does will go to Moneybags rather than to the politicians. Likewise, the evidence suggests that among the general public advocating higher government spending is a substitute for actually giving to charity. Saying that you favor the above sorts of changes to the tax code just doesn’t have the same conspicuous compassion value as saying you favor higher levels of government social spending.

Gun control,

Government Single Payer Healthcare,

Living Wage laws (i.e. like minimum wage laws, only not so minimal),

Hate crimes laws,

the Iraq war,

Affirmative Action,

Campaign Finance Reform,

Restrictive immigration laws,

Trade protectionism,

I could go on, but you get the idea. How about you? How often do you change your mind on a major political issue (and if the answer is ‘never’ doesn’t that give you pause)?