Warren Buffett's weird editorial on capital gains taxes

Normally, you'd expect a columnist who's claiming that a tax isn't going to have any deterrent effect to have to make an argument for why not. But when Warren Buffett writes an editorial for the New York Times, it seems to be good enough for him to say, in effect: Trust me, I'm rich!

Buffett wrote a similar NYT editorial last year.

Thomas Sowell has made the case for keeping capital gains taxes much lower than income taxes. Even the left-leaning Matthew Yglesias has supported that position, saying:

[T]his is definitely an issue where the conservative position is in line with what most experts think is the right course, and Democrats are outside the mainstream.

Maybe Sowell and Yglesias are wrong. But if they're wrong, there must be some reason why, and the reason isn't that Warren Buffett has more money than them.

Should we be so trusting of the super-rich in making claims about taxes? Or could it be that a multibillionaire like Buffett, who has a lifetime guarantee of  having more wealth than he could possibly spend, might be out of touch with the kinds of incentive effects that apply to most people?

A theory of the Obama presidency

"Tempting no-mess remoteness."

Twinkies

All this talk about the end of Twinkies is better advertising than any company could choose to pay for, guaranteeing that they'll be back eventually to meet the demand. They're the Arrested Development of snack cakes.

How to expand the government

Cut taxes.

A slight problem with the "new poverty measure"

It doesn't actually measure poverty.

Judge Richard Posner's bad reason to keep the electoral college

Judge Posner gives "five reasons for retaining the Electoral College despite its lack of democratic pedigree." He says they're all "practical reasons, not liberal or conservative reasons." I disagree with all of them, but especially this one:

3) Swing States

The winner-take-all method of awarding electoral votes induces the candidates—as we saw in last week’s election—to focus their campaign efforts on the toss-up states; that follows directly from the candidates’ lack of inducement to campaign in states they are sure to win. Voters in toss-up states are more likely to pay close attention to the campaign—to really listen to the competing candidates—knowing that they are going to decide the election. They are likely to be the most thoughtful voters, on average (and for the further reason that they will have received the most information and attention from the candidates), and the most thoughtful voters should be the ones to decide the election.

Sure, they pay the most attention now — because the current system makes their vote matter a lot more than those of voters in most states. Maybe the voters in those other states would start paying more attention if they knew their vote was as important as everyone else's!

And how does Posner get to decide which voters are more "thoughtful" than others? There are a couple huge problems with this. The most fundamental problem is that this isn't Posner's decision to make. In fact, it isn't anyone's decision to make: no one should have the authority to decide which states' voters get to be counted as more thoughtful than other states'. Everyone who's eligible to vote should have the chance to make a thoughtful decision and to have their vote count equally.

It's also naive to think that what distinguishes swing-state voters is that they're just really smart at deciding on a candidate. In fact, there is no category of voters that can be counted on to make objective, well-informed decisions. Everyone is influenced by their self-interest. People in some states care about ethanol in ways that people in non-decisive states don't, and this has a huge effect on federal policy.

Posner's "reason" for the electoral college actually restates the main problem with the electoral college: it privileges some voters' opinions far above other voters'. The fact that the electoral college is empowering to voters in some states is not a good thing; it's a bad thing, because the more you empower the voters in those states, the more you disempower voters in other states. There should only be such an imbalance in the democratic process if there's an extraordinarily strong justification. Considering how arbitrary state boundaries are, the possibility of vague differences among voters in different states is not a sufficient justification.

Constructive criticism

It's not the only kind of criticism worth giving.

Can Jon Huntsman save the Republican Party?

Jon Huntsman, the former Governor of Utah and U.S. Ambassador to China, never seemed to have a chance at the 2012 Republican nomination. But I hope that Republican pols are considering whether this was unfortunate in retrospect. Huntsman is only 52 years old, and if he ran again, he could benefit from the Republican Party's preference for nominating someone who has already run. (The lone recent exception was Bush in 2000; the rule has held up with every other non-incumbent Republican nominee going back to Nixon in 1968.)

Maybe the 2012 election will force Republicans to realize what Democrats have understood for a while: primaries are less about choosing the ideal candidate for the party's base, than about choosing a candidate who's going to appeal to swing voters in swing states. Huntsman, like President Obama, seems like the kind of person you'd expect to be the president of the United States in the year 2012 and beyond. Mitt Romney seems less like a modern-day president — or anyone the average American would expect to meet in their day-to-day lives — and more like someone who could have played the dad on the Donna Reed Show. (See the update at 8:58 in this live-blog from 2008.)

"Obama win may be good news for Pakistan flag-makers"

Not from the Onion.

How can Republicans win after 2012?

Self-proclaimed "liberal Democrat" Bill Scher has some advice for Republicans on how to win in the future. (And yes, it's genuinely good advice, not sarcastic or insincere!)

Condoleezza Rice says:

When you look at the composition of the electorate, clearly we are losing important segments of that electorate. And what we have to do is to appeal to those people not as identity groups, but understanding that if you get the identity issues out of the way, then you can appeal to Americans on the broader issues that all Americans share concerns for.

Alex Knepper (a libertarian Republican) agrees and elaborates:

That’s exactly right. The social issues serve as a barrier to persuasion. New voters — young people, immigrants — tend to identify with one of the parties on a ‘big picture’ basis — not by going down a checklist of issues and comparing the party platforms. The social issues are not only the easiest for the uninitiated to understand, but they have the most emotional impact. It’s one thing to argue over the merits of adjusting the capital gains tax rate — most people will submit that it’s an issue about which reasonable people can civilly disagree. But when Hispanics hear that the Republican presidential nominee has openly advocated making life so miserable for illegal immigrants that they won’t even want to live here anymore (that’s what “self-deportation” means, people), then an enormous wall has been created. When you’ve lost the trust of a minority group, they won’t listen to a word you have to say about Medicare, tax reform, or deficit-reduction. There’s nothing inherent about brown skin that makes a person hostile toward capitalism. But if people with brown skin think that the party of the free market hates them, then they’ll run into the arms of the party of statism. And why not? People need to feel assured that you view them with dignity and respect, not with contempt and loathing. There’s nothing that should be surprising about that.

We don’t need to win the Hispanic vote — we just need to increase our share back to levels more like George W. Bush’s. Changing our policies and tone toward immigration issues is only a first step to achieving that — not only because it is practical, but because it is the right thing to do. Once that issue is out of the way, then we can go about the vital task of reaching out to Hispanic voters on the basis of the timeless American values of upward mobility, economic freedom, and individual liberty.

I think a lot of people go along with Democratic economic policies largely because they've already decided to be Democrats based on social issues. As Knepper points out, social issues are relatively easy to have clear, unwavering views about. Given the choice between memorizing and repeating a few slogans to sum up the mainstream Democratic positions on economic issues, or reaching your own conclusions on those issues by soberly weighing the smartest arguments on all sides, many people just don't have time for the latter, no matter how much more intellectually honest it would be.

Yet people would rather feel a sense of clarity than uncertainty on the major issues of the day. So, when they don't have time to master those issues, they develop shortcuts, like saying their side cares, and the other side doesn't care — or, only cares about the wrong people. That approach is simplistic but powerful enough to be able to explain almost any political divide. Given that Republicans are the party of social and economic conservatism, and that their social conservatism is blatantly uncaring, socially liberal voters have a readily available shortcut for taking a stand on Republican economic policies: just as Republicans' social policies show that they don't care about women, blacks, gays, immigrants, etc., their economic policies show that they don't care about the middle class (or the poor), and that they only care about the rich (or corporations).

It's not just that many voters are socially liberal and prioritize social issues, causing Republicans to lose a portion of the electorate every Election Day based on those issues. Of course, that's true, but Republicans have a broader problem: their positions on social issues are turning off many voters from the very idea of agreeing with them on any issue. Conservatives like to bring up "the law of unintended consequences." Well, how many professional Republicans are willing to face the fact that their party's retrograde positions on social issues have been inadvertently holding economic conservatism hostage?

Why are people so much smarter at making personal decisions than deciding how to vote?

An excellent explanation.

Live-blogging the final presidential debate of 2012

I'll say anything I have to say about tonight's presidential debate, which you can watch live online, in this post.

I'll be writing down any quotes on the fly, without the aid of a transcript or pause/rewind button. So they might not be 100% verbatim, but I'll try to keep them as accurate as possible.

9:07 - Jill Stein (Green Party) wants to "bail out the students, not the banks." I'm not so sure. Stein makes it sound like of course we should bail out someone, and the question is who to bail out. Maybe the real problem is the very idea of bailouts.

9:09 - Stein criticizes President Obama for "expanding free-trade agreements," which will "continue to offshore our jobs" and "undermine American sovereignty." She wants a "fair-trade agreement" to protect workers and the environment. Isn't supporting "fair trade" really a euphemism for opposing free trade?

9:12 - Gary Johnson (Libertarian Party) unsurprisingly starts out by expressing his support for free trade, pointing out that it makes goods and services cheaper for us as consumers. The problem is when free trade turns into "crony capitalism." Instead of creating loopholes, government should "get out of the way" and "create a level playing field for everybody." He'd eliminate the corporate tax.

9:16 - Stein describes a scenario where 100 loaves of bread are distributed to 100 people, and says that 1 person would get 40 loaves, while 50 people would get just 1 loaf. The bread is all of America's wealth, and the 100 people are the American people. She then says she supports a "living wage," which presumably means dramatically increasing the minimum wage. She doesn't explain how forbidding employers and employees from entering into mutually beneficial arrangements would equalize the distribution of wealth, rather than increasing unemployment.

9:20 - Johnson lambastes Stein for her support of increasing corporate taxes: "Why not increase the corporate tax rate to 70%? Why not 100%?" He argues: "Whatever we tax, we get less of" — raising corporate taxes causes businesses and jobs to leave the United States.

9:22 - Johnson warns of a "monetary collapse" resulting from government-backed inflation. "I am livid over the fact that we bail out Wall Street from making incredibly bad decisions — that they don't lose their money. . . . Capitalism on the way up, communism on the way down!"

9:26 - Stein is also against the fact that banks are considered "too big to fail." It seems like everyone is.

9:28 - Stein: "After a decade of war, over $5 trillion spent, and thousands of American lives lost, what have we accomplished?" Not stable allies or women's rights. Unlike in the Obama/Romney debate on foreign policy, she raises criticisms of Obama's drone war.

9:32 - Johnson: "Drone attacks potentially take out the target, but only 2% of its effectiveness is on the target. The rest is unintended consequences."

9:33 - Johnson flatly says that foreign aid "should stop." "Contrary to what we were brought up to believe, foreign aid does not go to poor people. It goes to prop up dictatorships. But it goes to dictatorships that are supposedly in America's best interests. . . . It's poor people in this country giving money to rich people in foreign countries."

9:35 - Stein seems to support foreign aid in principle, but says we need to "end the predominant form of foreign aid, and that is military aid." But even if our foreign aid didn't include any military aid, wouldn't it effectively make it easier for the recipient countries to spend more on their militaries?

9:39 - Johnson: "There are unintended consequences to our military interventions — always worse rather than better!"

9:40 - Stein says that "there are countries in the Middle East that do have nuclear weapons now, and that includes Israel." That's not officially public knowledge, so it appears unpresidential for a candidate to state it explicitly.

9:42 - Stein connects anthropogenic climate change to currently displaced people in New York. She pins the blame on "fossil-fuel politics," which she says Obama has participated in as much as Republicans.

9:45 - Johnson says he believes climate change is anthropogenic, but he doesn't think he as president could stop it. As always, his solution is economic growth spurred by free markets: consumers will demand that their products somehow reduce carbon emissions.

9:48 - Johnson bravely supports price gouging. $7 per gallon gasoline would lead to shorter car lines at the pump, and would attract entrepreneurs.

9:51 - Johnson says that all government action is "well-intentioned"; of course, the problem is unintended consequences. He describes his efforts as Governor of New Mexico to respond to a forest fire — which itself was caused by government. (Wikipedia has information on this episode.)

9:53 - Stein says climate change is an "emergency." "It's as if we've been attacked." She says it's a bigger emergency than Pearl Harbor.

9:57 - Johnson says that Stein seems to think government is the answer to all our problems, and he asks Stein what she thinks about net neutrality. Stein says she's for it, and adds that she doesn't assume government is the answer to every problem. "I'm not an ideologue. I'm a doctor. I don't actually know much about ideology. As a doctor, I look for practical solutions."

9:59 - Both candidates say that they're not aware of any way that Wikileaks is a threat to national security. Stein goes further and says that secrecy is the greatest threat to security.

10:03 - Stein warns that President Obama has "reinterpreted" the 2001 Authorization of the Use of Military Force to authorize himself to "assassinate anyone, including American citizens."

10:05 - When asked about police brutality and excesses, Stein brings up a recent experience when she showed up at a presidential debate to insist on being included. She was arrested and "cuffed tightly to a chair for 8 hours."

10:07 - Johnson's response to the police question focuses on drugs: "I am going to do everything I possibly can to bring an end to the drug war. I would like to see the legalization of marijuana now."

10:08 - Johnson calls the TSA a "Constitution-free zone."

10:09 - Johnson says that if either Obama or Romney wins, we'll have "a heightened police state," "a continued state of war," and "unsustainable spending."

10:12 - Johnson does an extended impression of Obama giving a press conference where he started out saying that European countries that practiced austerity avoided the problems of countries that spent more money than they had — Obama then went on to say (according to Johnson) that the United States is different because we can print more money and use "leverage."

10:14 - Stein disagrees with Johnson, saying that the track record of "austerity" in Europe and the United States is abysmal. Johnson: "I think that's just baloney!" He says we need to stop spending more money than we have, or we'll have a "national collapse."

10:21 - Stein and Johnson both support labeling of genetically modified foods. Johnson connects this to the idea of a free market: consumers should make choices based on accurate information. He says he wouldn't be able to function if not for food labels, since he has Celiac disease and can't eat gluten.

10:23 - In her closing statement, Stein says she'll "put an end to student debt." She calls students "indentured servants."

10:24 - Johnson says in his closing statement: "Vote for the person you believe in. That's how you change this country for the better. I'm more liberal than Obama when it comes to civil liberties. I'm more conservative than Romney when it comes to dollars and cents. . . . I made a name for myself [as governor] by being a penny-pincher. . . . I don't know if there's a more important vote right now if you want to register your distaste with what's happening in this country." Johnson ends by asking for 5% of the vote, which will let the Libertarian Party get more ballot access and receive federal matching funds. So, the libertarian's slam-dunk argument for why you should vote for him is that it will let him receive federal-government benefits.

Why it matters that drones haven't been debated in this presidential race

Ramesh Ponnuru explains:

Neither side wants to look softer than the other on terrorists. Hence the bipartisan support for the strikes. Liberal groups that might be inclined to protest the policy have been quiet because Obama put it in place. The lack of debate about our reliance on drones is a shame, because there are both practical and moral objections to it.

A few conservatives have raised one practical concern: Killing terrorists is justified, they say, but we need to kill fewer and capture more to gain intelligence. You don’t have to support waterboarding, as some of these critics do, to agree with that point.

Another concern, raised by a few liberals, is that the strikes have increased anti-Americanism abroad. . . . The Pew Research Center has found strong opposition to drone strikes in almost every country.

But the morality of the policy is what most deserves scrutiny. . . . In January, Obama said, “I want to make sure that people understand actually drones have not caused a huge number of civilian casualties.” A report by the Bureau of Investigative Journalism found hundreds of civilian casualties in Pakistan, including 176 children.

In May, the New York Times reported one possible explanation for the discrepancy in estimates: Obama “in effect counts all military-age males in a strike zone as combatants, according to several administration officials, unless there is explicit intelligence posthumously proving them innocent.” In other words, Obama has not found much evidence of civilian casualties because he’s not looking for any. . . .

The president’s aides told the Times that he is a “student of writings on war by Augustine and Thomas Aquinas” and can be trusted to make the right judgments. His practical definition of combatants as anyone we happened to kill suggests otherwise, although too much of the program is secret to say for sure. The fact that we have barely debated this issue makes it hard to believe that our political system is getting it right, either.

Read the whole article for more thoughts on how just-war theory applies to Obama's drone war.

Previously: What is President Obama's drone war in Pakistan doing?

Why politicians lie

This explains so much about politics and government (written by an Australian economics professor, but applicable in the US to Democrats and Republicans alike):

We demand of our politicians that they share the same beliefs as we do, even if they are ridiculous beliefs, and that they explain everything as favourably for our self-esteem as possible, including our undoubted victory in the next war and the end to poverty within our lifetime. The impossible promises given out regarding war and poverty are repeated for almost anything. For instance, we all want good schools, but we don’t want to pay for them or accept that to really improve the education of the majority means letting go of other ideals, such as the ‘no kid behind’ doctrine that in reality translates into an extremely low base level of learning. We want our cakes and eat it, so we fully expect to see many new initiatives that promise improvement but not much change in reality. Similarly, anything that we as a group have agreed is objectionable or desirable is something we expect our politicians to promise to remove or provide. Politicians are thereby mandated to promise us to remove poverty and climate change, whilst they will deliver economic growth and justice. . . .

Whether or not politicians are actually able to generate 100,000 jobs or not is also irrelevant. What matters is whether the majority of the population believes such job-creation is possible. Hence the limits to lies are given by the education and intelligence of the population. The population knows full well that politicians cannot overnight make their husbands and wives more attractive and caring, and would thus quickly brand any politician promising such things a liar. . . . So the politicians must be honest about their inability to improve husbands and lie about the effect of their policies on climate change. . . .

If you are good at reading the hidden desires and proclivities of your population, you win elections and thus ensure you and your party thousands of cushy jobs and all the associated trappings of power. The competitive nature of politics furthermore ensures a continuous search for storylines that gather political support. Those storylines are sought from the wide world of truth and fantasy alike: whatever is believed and is popular goes – the truth in one instance, a complete fabrication in another. The political process is thereby a search for popular truths and lies and will deliver both in ample measure.

The comments about education remind me of this passage by the British philosopher A.C. Grayling in Meditations for the Humanist: Ethics for a Secular Age (162):

Although there are few if any true democracies in the world — most dispensations claiming that name are elective oligarchies — the democratic spirit nevertheless invests Western life, for good and ill both. The good resides in the pressure to treat everyone fairly, the ill resides in the pressure to treat everyone alike. This latter is a levelling tendency, a downward thrust, which dislikes excellence because it raises mountains where the negative-democratic spirit wishes to see only plains. But democracy should not aim to reduce people and their achievements to a common denomniator; it should aim to raise them, ambitiously and dramatically, as close as possible to an ideal. And that means, among other things, having institutions, especially of learning, which are the best and most demanding of their kind.

Businesses help people

The Sandy experience has reminded me of this Thomas Sowell column.

People keep talking about the role of government in helping people. (On the day the cyclone hit New York City, the New York Times ran an editorial with the headline: "A Big Storm Requires Big Government.") That's a valid point, but a lot of the credit for helping people recover from the storm should go to businesses. It's all too easy to implicitly exclude businesses from our mental category of those who help people. (Why? Because they're driven by profits? Is that worse than being driven by votes?)

I can think of many ways that businesses helped me get through the past 5 days, when the power was out in my apartment and my workplace. (It came back in my apartment earlier today.) I just had breakfast at a diner in Manhattan, which seems like an amazing experience now even though the menu was limited. I also went shopping at Whole Foods to replace some of the food I had to throw away when my power went out. During the blackout, I bought much-needed food and supplies at stores around town; some of these stores struggled to open as soon as possible after the storm even though their power was still out. My credit-card companies emailed me to offer various kinds of assistance. Cafes, stores, and banks let people linger to charge their phones and computers, allowing them to stay in touch with friends and family who could offer further help.

Government has been helpful too — the police being the main visible example. Government may have also helped me in unseen ways, and the same could be said of businesses.





(Photos were taken by me yesterday. The first is La Lanterna Caffe; the second is Mamoun's Falafel in Greenwich Village.)