Why I move right – but could never vote Republican

In accordance with the old truism, I’ve moved right – I’ve become more conservative – as I’ve gotten older. This is partly the natural cleaving to the old ways, it’s partly getting an MA in Economics from the University of Tennessee, and it’s a lot about moving to the UK and seeing the consequences of a true welfare state. You talk about dependency culture – whooo-weee, daaaang – there are generations of people here who don’t have the foggiest about work.

So in Mitt Romney’s withdrawal speech (full transcript from the NYT) there were some things I agreed with:

Dependency is death to initiative, risk-taking and opportunity. Dependency is culture killing. It’s a drug. We’ve got to fight it like the poison it is.

Yep. I agree. It is a poison. A poison that rots the soul.

But he goes on in that mean spirited Republican way which just sickens me. Sickens me with its mantle of “personal responsibility” – which is just a slick cover for tight-fistedness, for I-got-mine-so-screw-you, and most shamefully for sticking their noses in the trough of public goods that they like (highways, infrastructure, business tax credits and subsidies, policing and defense) and turning off the tap for other social goods that they have access to privately ( i.e. health care) despite the fact that this approach is actually economically inefficient and delivers poorer outcomes overall.

Now, some people think we won that battle when we reformed welfare. But the liberals haven’t given up.

At every turn, they tried to substitute government largess for individual responsibility. They fight to strip work requirements from welfare, to put more people on Medicaid, and remove more and more people from having to pay any income tax whatsoever.

And the crowd cheered and the band played on.

Is this the latest sick, selfish Republican mantra? Make sure that poor folk don’t have access to health care? Make sure the low paid pay through the nose but get rid of taxes on unearned income (e.g. capital gains, estate taxes)?

One thing I’ve learned about a dependency culture in the UK is that you want to make the transition into working as easy and rewarding as possible. One truth about universal health care that the Selfish-right don’t want you to know is that it actually encourages economic activity and entrepreneurs. In the US, some people get caught in the trap of losing health benefits when they start to earn too much money. In the US, people are stuck with dead end jobs or denied the opportunity to go out on their own because they must cling to their employer provided health care.

In the UK, the non-working have every incentive not to work (at least in the short run) as they lose benefits pound for pound as they start earning (which doesn’t take into account that leisure does have value) and they come into a rather punitive and regressive tax system. My tax burden is far lower now than it was when I was barely scraping by (though of course I am paying far more overall – it annoys, but it doesn’t hurt now.)

The point is, of course, that everyone has to start somewhere. And unless you’re the privileged child of wealth, the place you start is at a very low wage job. You work your way up. And you should be rewarded for trading a life of penurious leisure for penurious labor by keeping as much of your wage as possible when you’re at that rough, rotten bottom rung of the economic ladder.

It’s not as if the low-paid don’t pay taxes. They pay a lot of tax (proportionately). They pay taxes on goods and services. They are almost certainly paying other payroll taxes (FICA in the US, National Insurance in the UK). And they can’t escape the taxman with sheltered income and offshore accounts.

I believe in the hand up, not the handout. But forcing the poor to hand-over disproportionately, making their precarious situation all the more tottering is just wrong.

Euro-fantasy

Friday night’s Euro millions lottery draw had a jackpot of eighty-eight million pounds. That’s roughly a squillion dollars what with the weakness of the US currency.

I haven’t checked our tickets yet. To check would be to almost certainly ruin the fantasy given the actual odds. I figure I can maximise the entertainment value of the tickets by not checking them for a bit – not knowing that I haven’t won.

I’ve decided that if we do become squillionaires, I won’t be going back to work. The Vol-in-Law said he’d feel obligated to finish out this semester.

I’d also buy a new car, a house in the country with an electronic gate, a boat, I’d look for some kind of business venture to invest my money in and occupy my time. Well, I already know what that would be, but am somehow superstitious of mentioning it. But it would be fun and something the whole family could enjoy (and no it wouldn’t be the revival of Pigeon Forge’s Porpoise Island).

I think I might also buy the Vols a defense, if that didn’t violate NCAA rules or something.

Bank run!!!

I never thought I’d see a run on a bank in my lifetime. It seemed the stuff of black and white footage of desperate men and women in woolen suits and hats. But late last week and continuing this morning there’s a run on a British bank called Northern Rock. I’ve heard the mood in the queue is nervous but upbeat – a bit of the old British blitz spirit. I half fancied going down to a branch just to soak in the atmosphere of this historic blip.

It all started when Northern Rock asked the Bank of England for a line of credit, because the wholesale money markets that they usually used to fund their mortgage loans was jumpy following the sub-prime mortgage market problems in the US. The Northern Rock were particularly exposed because they mostly deal in mortgages rather than a wide array of financial products and they mostly access the money markets rather than funding mortgages largely from moneys on deposit.

In the UK, deposits are only underwritten or guaranteed in full to £2000 ($4,000) and 90% of further deposits to a value of £35,000. So even relatively small time savers were at some risk.

Too little, too late?
Although the Government expressed full confidence in the bank and assured savers that there was no need to take their money out, although they could if they wanted to – there was no talk until late yesterday of extending the deposit guarantee. Shortly after the end of banking hours yesterday the Chancellor Alistair Darling (the man with the funniest eyebrows in politics) announced that all deposits would be guaranteed. But only for Northern Rock Savers and only in this crisis. Frankly, that would make me all the more nervous. It’s one thing to get reimbursed through a recognised scheme, but it’s another to rely on a promise at a press conference.

I think what’s needed is a broader guarantee on all deposits to a reasonable level (£50 to £75k off the top of my head) for all banks and building societies (kind of like a savings and loans).

The soulful science

Being at home, I’ve got BBC Radio 4 on all day. It’s talk radio for the chattering classes. So I get to hear all kinds of interesting things. Like yesterday, I heard a piece on the Soulful Science.

What do you think the soulful science is? Is it the study of saxophony? Is it the discipline of understanding the lurve connection between lustful adults? Is it economics? Yes, you guessed right. It’s economics.

Economics is perhaps best known as the dismal science, but Diane Coyle wants to rebrand the study as The Soulful Science. She says that economists are misunderstood. Yesterday she enumerated those misunderstandings:

• economists are heartless/ don’t care about people
• economists only care/ think everything is about money
• economists don’t understand how people really behave
• economists don’t understand the complex realities of real life
• economists know the price of everything and the value of nothing

…and so on. I’ve been told all these things to my face, mostly when I was a graduate student in economics. And that might have hurt me, had the screwed up little dark spot in my chest not already been dried to dust by the too much microeconomics.

Just kidding.

I kept saying “No, you don’t understand…” or “Money’s only a points system, it’s not about the money.” But that got me pretty much nowhere. And when one of the econ professors in our department said all economists share two traits – a fondness for high school geometry and a cynical view of human nature we couldn’t find any student amongst our number who bucked his theory. And frankly, cynical geometry buffs don’t sound very soulful.

Dr Coyle says that everything has changed about economics though…

Coyle shows how better data, increased computing power, and techniques such as game theory have transformed economic theory and practice in recent years, enabling economists to make huge strides in understanding real human behavior. Using insights from psychology, evolution, and complexity, economists are revolutionizing efforts to solve the world’s most serious problems by giving policymakers a new and vastly more accurate picture of human society than ever before.

I’m not so sure that economics has changed. I always thought that the power of economics was its ability to predict human behaviour and inform policy and decision making. Economics, like any academic discipline, is pretty diverse. And while I didn’t think much of Freakonomics, I did appreciate that it helped bring a more “human” face to economics. And I guess, it’s easier to sell books on an argument of revolution rather than evolution.