Some General Theses about Politics and Economics

On the 500th anniversary of Luther's 95 Theses on the Power of Indulgences, consider a few about politics. After all, selling political indulgences is not so different from selling spiritual indulgences, but I'm not smart enough to think of 95 theses on politics, and even if I could think of 95, I couldn't nail them to the church door; my church has glass doors. Whether Luther actually nailed his theses to any church door is uncertain, but it makes a good story and many paintings and inspired the longest footnote in American literature.

But unlike Luther, I can post what I have to the web:

Things I learned in freshman American government in 1965:

  1. Liberty and equality are antagonistic rather than complementary. Maximizing one (anarchy or communist dictatorship) minimizes the other. One essential aspect of a successful democracy is keeping these two tendencies in a dynamic balance over time. More here or search the web for a variety of viewpoints.
  2. Every mother would like her son to grow up to be President, but no mother would like her son to grow up to be a politician. That's a fundamental misunderstanding of one of the President's chief roles. Most other countries have a Head of State separate from Chief Politician. America doesn't. That makes it harder to get rid of the Chief Politician.
  3. The two party system is as fundamental to our democracy as anything in the Constitution. Nothing in the Constitution mandates it; the founding fathers were suspicious of partisan politics. The fundamental forcing function is laws in 48 states that award electoral votes on a winner-take-all basis. Nothing requires that; it's just a tradition, and one that two states don't observe. But the 48 that do reward candidates who can obtain majorities in many parts of the country, and that is a force for stability.
  4. The only part of the electorate that matters is the 20% in the middle. About 40% of the voters will reliably vote Democratic, and 40% Republican, almost always. Elections are decided by the 20% who might vote either way because they do not feel ideologically attached to either party. Preaching to the choir is a luxury, not a strategy. Only about 63 percent of Trump's supporters actually consider themselves Republicans. Almost all the rest do not affiliate with either party, and these voters were crucial to Trump's success in decisive states.
  5. Ideological overlap between the major parties is [was] a feature, not a bug. In 1965, most people did not worry that the world would come to an end if the other party obtained power for a while. There were liberal Republicans and conservative Democrats. That changed permanently during the Nixon years. Now the parties are more like those in other countries, where there are many political parties and not much movement between them by individuals. The movement occurs in the formation and dissolution of governing coalitions in parliamentary systems. The American Congress is not really set up to support more than two parties; nominally independent legislators have to decide which party to caucus with if they want to have any hope of influence and committee assignments. That's why Bernie Sanders caucuses with the Democrats.
  6. You can't [couldn't] tell in advance how a Supreme Court justice will decide. Nobody expected Hugo Black from Alabama to lead the liberal side of the Court. Nowadays Supreme Court nominees are much more carefully vetted for political beliefs.

    One thing I learned in freshman economics in 1968:

  7. Nobody can defeat the business cycle. Our hope and despair is that no matter who's running the government and no matter what they do, the economy will wax, peak, wane, bottom, and repeat. Whoever is in charge will take the credit or get the blame for whatever was bound to happen anyway. Government action or inaction can affect the timing and severity to only a limited extent.

    Later conclusions

  8. It's immoral to make future generations pay for present consumption. There's nothing wrong with investing for the future and letting the future pay part of the bill. That's what prior generations did for us and to us. But consumption is not investment. Examples of present benefit and future cost:

    Reduce the Federal deficit to control trade deficits.

  9. The earth is limited. Ponzi schemes always come to an end. You can't win by doubling down - house limits make sure you won't.

    The earth's resources are finite. This means that populations can't increase indefinitely and fixed populations can't increase their resource usage indefinitely. At some point sustainability will be enforced. Humanity might be able to rationally choose sustainability in advance of need; if not, the traditional enforcers take care of the problem: war, famine, disease, ...

    In particular, a positive population growth rate is not sustainable. Modern medical technology, increasingly inexpensive and democratized, enables more people to survive to maturity, but does not guarantee them all a way to make a living as adults. In fact many traditional occupations have disappeared due to modern automation technology. Military dictators, however, can find work for the people, inventing reasons to believe that the little that our neighbors have rightfully belongs to us. Modern information and communication technology can be exploited to make sure that the people hear the message from the leaders, and only that message. Modern military technology, increasingly inexpensive and democratized, will eventually result in zero population growth, usually by way of negative population growth.

    It's in the nature of positive feedback and exponential growth that phenomena like climate change causality only becomes obvious to casual observers when it's too late for easy solutions, if there are any solutions at all. In the case of global warming, Jupiter and Venus will eventually perturb the earth's orbit enough to provide a solution in the form of another ice age.

    Wealthy western democracies are all facing a problem of aging populations and falling birthrates. In order to maintain their previous standard of living, they have to import workers by immigration. But eventually the standard of living has to fall to a sustainable level, both for the aging populations and the imported workers.

  10. Life is more complicated than in 1787. Most of the delegates to the Constitutional Convention had some understanding of most of the topics that were discussed. Nowadays almost nobody in Congress can prepare their own income tax returns, repair their own cars, or reinstall their own operating systems. We are all in a very complicated society that involves many more decisions than we can figure out for ourselves from first principles. We have to organize society so we can survive without figuring out everything for ourselves. An important part of that organization is government, to an extent that wasn't necessary 200 years ago. Parts of our lives are going to be governed by distant bureaucracies. Who would expect an unelected Wall Street bureaucrat to serve you any better, on average, than an unelected Civil Service bureaucrat?

    Jefferson realized that his ideal of agrarian democracy, in addition to resting on an immoral foundation of slavery, was also threatened by Hamilton's industrialization plans. Hamilton wanted to make America great enough to stand up to foreign powers, but that implied division of labor and specialization of knowledge.

  11. The critical decision about public medical care happened a long time ago . In parts of the third world, poor people who show up at a hospital emergency room and can't pay are thrown back out on the street to die. The United States, along with most of the civilized world, went beyond that many decades ago.

    So instead of dying on the street, poor people get treated for free in emergency rooms around the country, regardless of whether their conditions were due to bad luck, bad genes, or bad choices. The only real questions are how to provide that free care as inexpensively as possible (usually by treating conditions before they become emergencies), and then how to pay for that free care. The current solution, Obamacare, originated with the conservative Heritage Foundation and it was first put in practice under Gov. Mitt Romney as MassCare.

    Whether the rest of the population pays for that free indigent care by mandatory insurance or mandatory taxes is a secondary question that will ultimately be resolved by a single-payer system, as with most of the civilized world. In the meantime there will be lots of debate about how quickly we will get there. There are those - such as those who wrote the ACA repeal/replace bills - that don't think billionaires should have to pay for medical care for poor people. It will take a while to educate them or outvote them.

  12. Buyer-beware deregulation benefits profiteers, not consumers. Deregulating savings and loans didn't help consumers in the Reagan administration. Deregulating banks didn't help consumers in the Bush administration. (It will be interesting to see how Trump's financial deregulation will not help consumers.) Deregulating internet access won't help consumers in the Trump administration. Deregulating mountain-top removal coal mining won't help the neighbors if the sludge start to slide. Deregulating airlines has been extremely unpleasant for consumers. In all cases, ordinary consumers don't have the expertise to evaluate and decide about complicated technology or even to evaluate and decide about private organizations claiming to evaluate and advise about complicated technology. The perpetrators take the money and run and start over, or go bankrupt and run and start over. If there's any compensation to the injured, it will be from the government and the taxpayers. So what's so bad about having the government involved in the first place to exercise a little prior restraint?
  13. The Law of Unintended Consequences rules complex systems, both human and electromechanical. Originally formulated as a sociological thesis about laws and behavior, it was soon recognized by technologists involved with complex eletromechanical systems. Make a change in a complex system like aircraft avionics or income taxation, and you elicit a legion of unintended consequences - with no guarantee that the intended goal will be achieved. Thus Republican Federal legislators probably did not consider that Democratic California legislators might circumvent limitations on deductibility of state and local taxes by making them into charitable contributions.
  14. Fresh and local is the way to go when possible. There are still some things that we can do by ourselves, or at least by people that we know somewhat. Local businesses, locally owned, locally operated, locally regulated. Think globally, act locally when you can - applies to politics too. Applies to food politics, too!.
  15. Checks and balances on power have to be in scale. The jurisprudence that American inherited from England is based on the thesis that truth and justice is most likely to emerge from a vigorous contest of opposing points of view. For this contest to be meaningful, both sides need comparable power.

    Small-scale organizations can be kept in check by other small-scale organizations, but national organizations require national checks, and global organizations require global checks.

  16. The free market, whether local, national, or global, is constantly redistributing wealth from some groups of people to others. Wealth redistribution was not invented by leftist governments. The moral problem is that even beneficial change benefits society as a whole, by small amounts individually though large in the aggregate... but the former workers and businesses involved have suffered by large amounts individually, though small in the aggregate. The political problem is maintaining the proper balance between liberty and equality of opportunity.
  17. State and local government should be in the business of encouraging voter registration and voting. Republican legislatures particularly have tended to go out of their way to discourage voter registration and participation. That's poisonous for a democracy. Instead states should have positive incentives for voter participation, such as Congressional representation and Federal funding apportioned according to voter turnout rather than population. However, Nathaniel Persily argues that such a scheme would under-represent disenfranchised minorities.
  18. The TOTAL tax system in the United States is NOT really progressive - by design. The Federal and most state income tax systems are only nominally progressive in that tax table rates increase with income. That's just a smokescreen - the actual total tax burden - federal+state+local - income+employment+sales+property+estate - as a percentage of discretionary income is at best flat on average, and regressive for those who have the means and motivation - by design, to punish the poor and reward the rich.
  19. Slavery remains the original sin of American politics. Slavery begat segregation begat the Southern Strategy, which eventually destroyed bipartisanship and led to the partisan gridlock we know today. America was last "great at the time when families were united - even though we had slavery" - Roy Moore.
  20. There is no alien conspiracy behind the mess in Washington (or Sacramento). Conspiracy theories are an ancient ruse that opportunistic politicians use to justify their rise to power and then explain their inability to perform as promised. The seductiveness of conspiracy theories is that they appeal to our imaginations.
  21. No single person can clean up the mess in Washington (or Sacramento). The cause of the mess is voters that elect candidates who promise simple solutions to complex problems. Those candidates fail once elected and may blame somebody else, but might get replaced by other candidates who make the same promises and suffer the same failure and misplace the same blame. That's the true conspiracy theory - politicians of all stripes tell voters what they want to hear instead of what they need to hear, because that's what it takes to get elected. Voters conspire against themselves - and blame politicians for doing whatever it takes to get elected.
  22. Modern technology enhances capabilities to do good and evil. The information age is also the disinformation age. Ubiquitous automatic servants can serve in both directions: There is no privacy on the internet. Spyware is getting to be big business, a real job creation machine.

    Although the basic internet protocol was designed to be robust in the event of a nuclear war, in the event of natural or artificial disaster, the technology stack above IP is so complicated that it is easily disrupted - can you survive without reliable GPS? Can your specmarks survive without prefetch?. The effect of Meltdown and Spectre might be more noticeable than first thought.

  23. The force multiplier effect of modern technology requires prior restraint. Small investments of money or effort can produce vastly larger damages than the investor's resources, so the damages can't be recovered by the damaged parties. Such prior restraints were not necessary two hundred years ago because force multipliers were smaller.
  24. Simpler and more verifiable are better than fairer. Sometimes - as in congressional redistricting and tax code provisions - complicated features that experts might argue are fairer in some metric are not as good for democracy as simpler features that ordinary people might hope to understand. In democracy, fairness that is undetectably obscure is suspected of obscuring fundamental unfairness.
  25. Some political problems can't be solved at a particular time. Afghanistan will never be stable as long as Kashmir is unresolved, as India and Pakistan compete for influence in Afghanistan. But Kashmir is unresolvable - I once read a story about a State Dept veteran interviewing new college grad job applicants. He asked what they'd do about Kashmir - and the only correct answer was silence. If they said anything at all, they failed that test.

    Israel/Palestine is a similar problem. North Korea is another. To solve refractory problems like these requires a rare coincidence: leaders on both sides have to WANT a solution, and they must have the political capital to negotiate a solution even against their own muscular internal opposition. The current leaders of India and Pakistan do not want a solution. The current leaders of Israel and Palestine do not have the political capital to negotiate a solution.

    The net result is that no third party can negotiate a solution for them.

  26. The golden rule is a good guide for domestic politics and international relations. When you're ahead, don't lead by example in a direction that you would not want to follow when things are not going your way.
  27. There is hardly an issue in modern politics that wasn't evident when our country was founded.

    Hamilton, Jefferson, Madison, Washington would be astonished by technological advances, it is true, but also by the lack of advances in fundamental democratic political processes and the persistence of movements to undo most of their best ideas. Listening to Chernow's biography of Hamilton one might be amazed at how little we've progressed from the Alien and Sedition acts: Federalists saw their way of life was threatened by an immigrant invasion of natural republicans, intent on importing its destructive alien values from their wrecked homelands, abetted by a treasonous Lugenpresse. Not long after, Jefferson's Louisiana Purchase was condemned by most of the Federalists (but not Hamilton) as an unconstitutional executive usurpation - because they foresaw that much of the new frontier would become agrarian slave states opposed to the industrializing northeast.

    One might also be amazed at how well President Trump encompasses all the private shortcomings of Adams and Hamilton, without any of the compensating public virtues of either.

  28. The next edition of Profiles in Courage needs to be about journalists, not senators. But first the journalists need to earn it.

    And a few words about personal finance

  29. There is no such thing as high return with low risk. If there were, why would anybody invest in T-bills or technology startups? In contrast, it's easy to find low return with high risk - just check any massively advertised scheme claiming high return with low risk.
  30. Investment for most people can be very simple. Invest directly - not through brokers - in no-load target-date mutual funds in equal amounts every month, then throw away the monthly statements. No-load to increase return, equal amounts each month to insure that you are buying more shares at low prices than high, and most important, target-date so the first decision you have to make is when you want the money, because that determines the acceptable risk, and that determines the maximum return. Throw away the statements when the target date is far away, so you don't panic yourself into selling at the bottom.
  31. If you own a house in California, you need a living trust and a pour-over will that puts your non-trust assets into your trust upon your death. It's probably a fair generalization, no matter where you live, if you have enough assets to put your estate in probate ($90,000 in California). If you have the simplest possible situation - one house, one marriage, one kid as beneficiary, competent to act as trustee - all in the same state, and in no danger of Federal Estate Tax - you might be able to get away with a canned living trust program. What you pay the lawyer the big bucks for is to force you to answer the hard what-if questions about numerous situations that are individually unlikely but collectively common enough to complicate most estate plans.

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