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The 1 percent needs better defenders

the economistLun, 17/06/2013 - 22:18

APPARENTLY someone, perhaps John Kenneth Galbraith, once said that the way to debate Milton Friedman was to wait for him to say "Let us assume..." and then immediately interrupt and say "No, let's not assume that." (Via Clay Shirky, via Dan Davies.) I thought of this quip on Saturday while reading a draft paper by Gregory Mankiw entitled "Defending the 1 Percent". Mr Mankiw begins with a thought experiment: "Imagine a society with perfect economic equality...Then, one day, this egalitarian utopia is disturbed by an entrepreneur with an idea for a new product. Think of the entrepreneur as Steve Jobs as he develops the iPod, J.K. Rowling as she writes her Harry Potter books, or Steven Spielberg as he directs his blockbuster movies." Everyone wants to buy the entrepreneur's product, which results in a hugely unequal distribution of income. Should the government shift to a progressive tax system to reduce the inequality?

Obviously Mr Mankiw discovers that the answer is "no", because that's the answer he has built his analogy to produce. But you don't even need to say "No, let's not assume that" to see what's wrong with this analogy, because Mr Mankiw has done a strange job of selecting his John Galt figures. Let's go along with Mr Mankiw's thought experiment: Steve Jobs, J.K. Rowling and Steven Spielberg are about to create their staggeringly popular products, which will increase inequality because everyone wants to buy them. But now let's imagine that just before these geniuses are able to bring their creations into the world, they die. No iPod, no Harry Potter, no Jaws. What happens then?

Here's what happens then. Instead of Apple dominating the market for MP3 players in the early 2000s, Sony and Samsung do; a little later, when smartphones come along, the battle for mobile operating ecosystems revolves around BlackBerry, Samsung/Google and Nokia/Microsoft. Instead of Harry Potter, some other children's fantasy book becomes the dominant franchise of the 2000s. And instead of "Jaws", some other movie becomes the first immense blockbuster of the 1970s, and a different brilliant director's career is launched. All of the money that was spent over the past few decades to make Mr Jobs, Ms Rowling and Mr Spielberg immensely wealthy would instead have gone to three other hard-working creative geniuses, of which the world has no shortage. There would be just as much inequality as there is now.

In other words, Mr Mankiw's analogy sneaks in his conclusion by implying that greater inequality is the price we pay for more invention and creativity. But his own choices of hero-entrepreneurs make it clear that there's no evidence to support this claim. Of the three Mr Mankiw proposes, only Steve Jobs plausibly had an irreducible, unique effect on material culture and the structure of an industry. Mr Spielberg and Ms Rowling are acclaimed artists, but their startling wealth and prominence are entirely due to the increasing power of network effects in mass culture over the past several decades. Mr Spielberg happened to be directing his first movies just as Hollywood was beginning to stage coordinated marketing blitzes that created round-the-block lines for top-grossing films. Ms Rowling hit the bookshelves just as a similar superstar phenomenon was taking over publishing, with sales increasingly concentrated on individual mega-bestsellers rather than spread across a few dozen authors and titles. Mr Jobs is an unusual figure in that his ability to combine engineering, aesthetics, and a vision of how users might interact with the digital universe has created a kind of integrated multi-product entity that might not otherwise have existed; it's not clear that BlackBerry, Nokia or Samsung would have been up to the task. But even in Mr Jobs's case, much of the power that accrued to Apple was due to the gradual sorting of the consumer information-technology world into integrated ecosystems, a trend that would have taken hold over the past decade even if Apple had flamed out in the late 1990s.

It's conventional wisdom that the entertainment industry has been in the vanguard of our increasingly superstar-oriented economy, with network-effect industries like IT and software close behind. Alan Krueger, head of the White House's Council of Economic Advisers, gave a talk about this last week at the Rock and Roll Hall of Fame. "The music industry is a microcosm of what is happening in the U.S. economy at large," Mr Krueger said. "We are increasingly becoming a ‘winner-take-all economy,’ a phenomenon that the music industry has long experienced. Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented—and it is often hard to tell the difference—have been doing better and better, while the vast majority has struggled to keep up." (Via Neil Irwin.)

So why does Mr Mankiw pick three figures from the entertainment and computer industries, where everyone knows the "superstar" phenomenon is strongest? Because if he used examples from other industries, it would be even more difficult to convince the reader that the immense rewards being reaped by those at the top had anything to do with their unique contributions to the economy. Last year the highest-paid chief executive in the country, at $131m, was a guy named John Hammergren, who runs a medical and pharmaceuticals business called McKesson. If he hadn't been running McKesson, some other guy would have been. If Michael Vascitelli ($64m) hadn't been running Vornado Realty Trust, somebody else would have. Perhaps those other guys wouldn't have been as good at their jobs; in that case, these firms would have lost market share to competitors. So what?

The social purpose of high executive pay is to create incentives for hard work to maximise profit. But these guys are being paid double what their predecessors were making in the 1980s, which was not exactly a period known for its stodgy egalitarianism. Are we seeing startlingly better corporate performance today than we were back then? Is there greater productive innovation in, say, medical technology or commercial real estate? Is our economy growing faster? Are general standards of living rising faster? No, no, no and no. What public interest is served by the fact that these CEOs, as a class, are earning a multiple of what their predecessors did a generation ago?

Mr Mankiw's analogy stacks the deck by making it appear as though great creative entrepreneurs create the consumer demand which leads to inequality. This is not how things work. Inequality is rising for structural reasons that have nothing to do with the social value produced by the labour of the top one percent of earners. If the government were to, for example, return top marginal tax rates to the levels that prevailed in the 1990s or the 1970s in order to compensate for the superstar effect, there is no reason to believe that the top one percent would produce any less value for society than they do now. Mr Spielberg would likely have worked just as hard at 1970s tax rates as he does at 2013 tax rates; indeed, he did so when he made "Jaws". Similarly, Mr Jobs worked very hard on the Apple 2e in the 1970s and on the iMac in the 1990s, and Ms Rowling worked quite hard on the Harry Potter series even though tax rates in Britain are much higher than those in America.

To avoid accusations that I'm just picking out an ill-thought-out analogy while ignoring Mr Mankiw's main thrust, I'll add a few more points.  Mr Mankiw argues that the calculus of progressive taxation is based on a confused utilitarianism. Whether high tax rates discourage productivity among the top one percent is the wrong question, he writes. Redistribution as such is misguided, he thinks, because we don't have any good way to measure the increased utility which redistribution aims to create for low earners: "there is no scientific way to establish whether the marginal dollar consumed by one person produces more or less utility than the marginal dollar consumed by a neighbor." This is strictly true, but I can't see how it's relevant in any normal society, where such compromises are made every time a law entitles citizens to equal treatment without trying to determine each person's exact individual preferences. And it's a particularly strange point to make in a paper called "Defending the 1 Per Cent". We can be pretty sure that a dollar is worth more to someone who earns $30,000 per year than to someone who earns $3 million.

Mr Mankiw's preferred alternative is a "just deserts" theory, in which people should retain the value of their labour beyond whatever is needed to provide public goods and compensate for externalities and market failures. "Confiscatory" tax rates, he says, should be avoided. This is one reasonable approach, but at the least, it suffers from the same calculation problem as the utilitarianism he derides: how much is a "confiscatory" tax rate, exactly, and according to whom?

But I think the worst weakness in the paper comes in Mr Mankiw's brief treatment of the Rawlsian justification for redistribution. Rawls's argument is that if people were asked what kind of society they'd want to be part of, without knowing whether they'd be rich or poor (ie behind the "veil of ignorance"), they would choose one where the rich paid taxes to fund social insurance for the poor. Mr Mankiw objects that this approach would also probably lead people to choose a society with mandatory organ donation, since they wouldn't know whether or not they'd need an organ. He thinks this a serious flaw in Rawls's argument:

If imagining a hypothetical social insurance contract signed in an original position does not supersede the right of a person to his own organs, why should it supersede the right of a person to the fruits of his own labor?

Why indeed? And how come when I break your window it's just vandalism, whereas when I break your nose it's assault? Because your rights over your own body are more fundamental than other kinds of property rights, that's why. If Mr Mankiw is looking to dismiss the Rawlsian social-insurance argument, he's going to need a better argument than this.

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Whistleblowers and the economy of esteem

the economistLun, 17/06/2013 - 17:22

EDWARD SNOWDEN, the erstwhile IT guy who worked for the National Security Agency (NSA) and is responsible for the Powerpoint heard 'round the world, is ___________.

(a) a hero

(b) a narcissist

(c) a traitor

(d) courageous

(e) all of the above

The contest to answer this question has already grown tiresome, because Mr Snowden's character and motives seem of small importance compared to his  revelations about the nature and scope of the NSA's surveillance. I certainly sympathise with Ron Fournier of National Journal when he writes:

I don't give a whit about the man who exposed two sweeping U.S. online surveillance programs, nor do I worry much about his verdict in the court of public opinion.

Why? Because it is the wrong question. The Snowden narrative matters mostly to White House officials trying to deflect attention from government overreach and deception, and to media executives in search of an easy storyline to serve a celebrity-obsessed audience.

Mr Fournier goes on to list ten questions that are, I agree, rather more pressing. Are the programmes exposed by Mr Snowden really legal? Do they really work? Such questions ought to be our primary concern.

Yet I do give a whit about Mr Snowden and I do worry about his fate in the court of public opinion. I worry because the conversation influences our tolerance for future overreach and deception from the security apparatus. More importantly, it influences our attitude toward future acts of bravery by public-spirited Americans who witness overreach and deception of this sort. One need not believe that Mr Snowden is a hero to see that the campaign to smear him is in large part a campaign of pre-emption against future leakers. The prestige and infamy that ultimately attach to Mr Snowden will surely affect the supply of future leaks. The rush to lionise and belittle Mr Snowden is a rush to get the jump in the fight to determine the level of status that whistle-blowers will enjoy, or suffer, in our culture.

The outcome of this fight matters, because, as economists like to say, incentives matter. But few incentives are pecuniary. Humanity operates primarily within an economy of esteem, and one basic function of any human society is to assign status, to distribute honour and shame. That pundits hustled to pass judgment on Mr Snowden is no surprise, but the way it has been done is illuminating, and depressing. Another, better, society might heap socially fatal shame upon David Brooks for his reckless, smug psychologising of Mr Snowden. Sadly, this sort of inane, moralising, diagnostic speculation falls well within the bounds of accepted American discourse, which reflects rather poorly on us. That we do not readily see that it reflects poorly on us also reflects poorly on us. The questions Americans do and do not find sensible to raise also provide grounds for sorrow. It makes sense to Americans to ask, "What kind of person would defy authority in this way?" But somehow it does not make sense to ask, "What kind of person seeks to join the special forces of a country known to conduct unjust wars?" or "What kind of person helps the state conduct its business outside the scope of public deliberation and democratic authority, and does not seek to expose it?"

There are reasonable answers to these questions, but it's telling that many Americans take offence when questions like these are even aired. I've heard a good deal of speculation about Mr Snowden's vanity, martyr complex and general moral unsoundess. But I have heard no speculation about the worrying sort of person who becomes Director of National Intelligence. Why not? Part of it is that, as our popular entertainments attest, Americans are infatuated with the romance of our secret police, and our soldiers are, ipso facto, heroes. By our distribution of esteem you shall know us. 

The attack on Mr Snowden's reputation is in no small part a rearguard action to keep America's spies and generals beyond the reach of suspicion, to maintain their relative immunity from serious democratic scrutiny so that that the public will continue complacently to trust them when they say, in so many words, "Trust us...or else". But it is democratic affirmation, not uniforms and security clearances, that makes state power legitimate. When the state acts without proper democratic authority, it acts as a rogue operation—as just another band of thugs with money and guns and a dangerous sense of self-righteousness. Whether the NSA's monitoring programmes are actually legal and effective may be more pressing questions than whether Mr Snowden deserves our esteem. But it became possible to address those questions openly only because Mr Snowden chose to speak up. If we wish to keep similarly pressing policy questions available for public examination, we must defend the honour of whistleblowers like Edward Snowden.     

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Watching the watchers

the economistLun, 17/06/2013 - 09:55

EVEN if you fear terrorists more than you do eavesdroppers, there is a risk that information America's government has deemed classified will be dumped on the web, say our correspondents

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Overlearned lessons from Bill Clinton

the economistVie, 14/06/2013 - 16:23

THE scariest possibility regarding Barack Obama's decision yesterday to begin providing limited military aid to the Syrian rebels would be if it had something to do with the advice he was getting from Bill Clinton. In a recent conversation with John McCain that he didn't know was being recorded, published on Politico, Mr Clinton made two basic points. The first was that one shouldn't "overlearn the lessons of the past"; intervention in Syria would involve less risky commitments than in Afganistan or Iraq, since there is little public or international pressure to commit American troops. The second was that if Mr Obama doesn't intervene in Syria and the result is a "calamity", he risks looking like a "wuss". Essentially, high levels of public opposition are not a good reason for Mr Obama to refrain from intervening.

I dearly hope that the policy documents the State Department is now drawing up regarding American military aid to Syrian rebel groups do not read "Goal: Keep POTUS from looking like a wuss." Mr Clinton is an extremely good politician, and he may well be right that the best political move for Mr Obama is to do something military in Syria to protect himself against accusations of passivity. But the president shouldn't be basing Syria policy on domestic political considerations; he should be defining America's humanitarian and strategic goals, and assessing what policies will serve them. The problem here may, in fact, be that Mr Clinton has "overlearned" some of the lessons of his own administration.

In terms of substantive policy, Mr Clinton supports supplying the rebels with arms, based on the premise that a little bit of military action is better than none at all.

“Some people say, ‘Okay, see what a big mess it is? Stay out!’ I think that’s a big mistake...Sometimes it’s just best to get caught trying, as long as you don’t overcommit—like, as long as you don’t make an improvident commitment.”...

“Nobody is asking for American soldiers in Syria,” Clinton said. “The only question is now that the Russians, the Iranians and the Hezbollah are in there head over heels, 90 miles to nothing, should we try to do something to try to slow their gains and rebalance the power so that these rebel groups have a decent chance, if they’re supported by a majority of the people, to prevail?”

This position sounds like a reaction to the bitter experience of the Bosnian stalemate of the early years of Mr Clinton's own administration, when America went along with a United Nations arms embargo that prevented the Bosnian army from fighting effectively against the better-armed Serbs. This approach guaranteed the continuation of the civil war and set the stage for genocide in Srebrenica. Mr Clinton was pilloried for this policy by liberal critics like Mark Danner and Samantha Power, now Mr Obama's nominee for ambassador to the UN. Mr Clinton's administration put those lessons to use in aggressively forcing a negotiated settlement in Bosnia in 1995, and then in the 1999 decision to go to war in Kosovo.

But that was a different time and place. NATO ultimately intervened in the former Yugoslavia to make it clear that ethnic cleansing was a war crime, and would not be part of the politics of post-communist Eastern Europe and the Balkans. The fact that Yugoslavia was in Europe is important: powerful states can credibly and effectively intervene in their own regions to defend their interests. It is not clear how to replicate that experience in a region where the local powers, especially Qatar and Saudi Arabia, have ideological and strategic visions diverging sharply from America's. And Mr Clinton's desire in Syria to "rebalance the power" without making "an improvident commitment" actually risks recreating the same sort of stalemate as in Bosnia. As this newspaper argued last month, "doing something hesitantly in-between, by helping the rebels a bit, but not enough to bring down Mr Assad, may be the worst of all worlds."

The problem here, as Robert Malley of the International Crisis Group argues, is that America still needs to figure out what the goal of an intervention is. Do we want to safeguard civilians? Then we should establish a no-fly zone and humanitarian safe areas with sufficient military strength to ensure Mr Assad cannot overrun them. Do we want to topple Mr Assad's dictatorial government? Then we should arm the most effective jihadi rebel groups. Do we wish to prevent the spread of anti-American jihadi terrorist groups? Then we should arm the more moderate groups. Do we want to enforce the international ban on the use of chemical weapons? Then we should attack Mr Assad's forces directly. Do we wish to simply shorten the civil war and end the killing? But what if the fastest route to a stable, unified Syria were actually a rapid government victory?

This newspaper backs the establishment of a no-fly zone to protect civilians. Mr Obama explains his decision to supply some arms to the rebels as a response to the use of chemical weapons by Mr Assad's forces, which the administration earlier described as a "red line". These are limited measures connected to clearly delineated goals. They also, as my colleague wrote last month, entail great risks. Unlike Libya, Syria has excellent air defences, and American efforts to impose a no-fly zone could lead to a full-fledged war between America and the Syrian government. Supplying light weapons to some Syrian rebel groups is unlikely to decisively shift the balance of power in the war, and may simply prolong the stalemate while Syria disintegrates and civilians are slaughtered.

Mr Malley warns that the Syrian civil war has been increasingly incorporated into the broader Sunni-Shiite sectarian clash, in which America must not be seen to take sides. But the biggest risk of all would be for Mr Obama to allow his policy to be guided by considerations of so-called "credibility". Ironically, Mr Clinton advises Mr Obama not to base his policy on public opinion, but then justifies that advice by warning he could end up "looking like a fool". Mr Obama shouldn't worry about looking like a fool. He should worry about making foolish decisions.

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Plan B, C and D

the economistVie, 14/06/2013 - 02:27

AFTER more than 12 years of litigation, a lawsuit over emergency contraception seems to have come to a close. Late on June 12th Edward Korman, a federal judge, accepted the Food and Drug Administration's plan to sell Plan B One-Step, an emergency contraceptive, to women of all ages without a prescription.

It has been a remarkably strange episode, characterised by political meddling in what should have been a scientific decision. It was perhaps unsurprising that George W. Bush objected to the broad availability of emergency contraceptives. The actions of Barack Obama’s administration were less expected.

The medical and social arguments for emergency contraception are obvious. Unwanted pregnancies are bad. Preventing them is good. Emergency contraceptive pills are safe. Yet President Obama's health department has twisted every which way before doing at last what it should have done in the first place: allow pharmacies to sell a safe medicine, without restriction.

The legal contortion began in December 2011, when the FDA recommended that Plan B One-Step be made available over-the-counter to women of all ages. That same day Mr Obama’s health secretary, Kathleen Sebelius, promptly scrapped that ruling, against the urging of medical societies. She decided that drug's availability without prescription should be limited to women older than 17.  

This was nonsense, said Mr Korman in a ruling on April 5th. The restriction was, Mr Korman wrote, “politically motivated, scientifically unjustified, and contrary to agency precedent.”  He added that Plan B was "among the safest drugs available to children and adults on any drugstore shelf.” Yet the Obama administration persisted. On April 30th the FDA tried a compromise, arguing that the pill be available over-the-counter to those 15 and older. It was only after further legal ping-pong that Mr Obama’s lawyers said on Monday that Plan B One-Step would be available without prescription to women of all ages.

Yet the victory is not complete. The Centre for Reproductive Rights, which has argued against the FDA in court, says that more forms of emergency contraception should be made available. It is unclear if the FDA will give Plan B One-Step the right to market its product exclusively—Mr Korman urged it not to, explaining that such a move would limit competition and raise prices. It is even unclear when Plan B One-Step might appear on pharmacy shelves. The FDA must approve the drug’s new labelling.

Still, the availability of at least one emergency contraceptive is hugely important. A study published in the Journal of the American Medical Association in 2011 puts it plainly. Researchers, pretending to be 17, called 943 commercial pharmacies in five states to ask for emergency contraception. In half of all calls, pharmacies in poor areas cited an incorrect age threshold for over-the-counter access. In 19% of the calls the researcher was told she could not obtain emergency contraception at all. This is unfortunate, given that emergency contraception works best when taken quickly. The new policy should alleviate the problem. It is only a shame that it took so long to come.

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Let them drive

the economistJue, 13/06/2013 - 20:10

JEIMY ZEPEDA was in an accident two blocks from her Connecticut home last year. One of her children was injured; her van was written off. The other driver fled the scene. His car was unregistered; he was presumed to be an illegal immigrant with no driving licence. So is Ms Zepeda. Illegals are often reluctant to call the police; they always ask for a driving licence. “Even when it isn’t your fault, just not having [a] licence makes you guilty,” says Armando, her husband.

As the Senate voted this week to allow debate on comprehensive immigration reform, several states are pondering a narrower problem. Until this year illegal immigrants could not legally drive except in New Mexico, Utah and Washington state. So they typically drive without lessons, testing or insurance.

This is dangerous: unlicensed drivers are almost five times more likely to be in a fatal crash. They are also less likely to stay at accident scenes, according to Yale Law School’s Jerome N. Frank Legal Services Organisation. The costs of accidents involving the uninsured are passed on to other motorists in the form of higher insurance premiums.

All this explains why Dannel Malloy, Connecticut’s governor, signed a bill on June 7th allowing illegal immigrants to apply for driving licences from 2015. Opponents complain that the recipients will use their new identity cards to obtain welfare, though this is forbidden.

New Mexico, which began issuing licences to illegals in 2003, saw a 23% decrease in traffic deaths between 2002 and 2010. The proportion of motorists in the state who are uninsured has fallen from 33% to 9% since 2003.

The list of states that give documents to the undocumented is growing. Colorado’s governor signed a bill on June 5th. Nevada, Oregon, Maryland and Illinois have all passed laws this year. The biggest prize would be California, home to almost a quarter of illegal immigrants. The state Assembly recently passed a bill, but it may die in the state Senate.

Not all the trends are liberal. New York abandoned a bill in 2007. Nebraska and Arizona deny licences even to “DREAMers” (undocumented immigrants brought to America as children). In Arizona, activists are suing the governor to change this. On June 11th Nebraska’s “DREAMers” filed suit, too. And New Mexico’s Latina Republican governor has for years battled to toughen its law; her latest attempt failed in March.

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In the right direction

the economistJue, 13/06/2013 - 11:46

GOVERNOR Jerry Brown has been credited with turning the state's fortunes around, but he still must confront some thorny issues, says our correspondent

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Thicker than water

the economistJue, 13/06/2013 - 01:41

DIVISIVE questions dominate the Supreme Court’s docket this year, but the most emotional decision coming down this month addresses a tug-of-war custody battle over a little girl named Veronica. In the unfortunately titled case Adoptive Couple v. Baby Girl, the court will rule on whether the biological father of a three-year-old had the legal right to reclaim his daughter after she had been given up for adoption. It’s a lose-lose situation: either the adoptive parents who raised Veronica from birth for 27 months, or her biological father, with whom she has lived since January 2012, will be heartbroken when the justices render their decision.

Discussion surrounding the case has focused on what is in the best interests of the child, but the legal question is oddly divorced from that inquiry. According to the Indian Child Welfare Act (ICWA), a 1978 law combating the removal of Native American children from their homes and reservations, a number of procedural safeguards must be followed before Indians are adopted by outsiders. Dusten Brown, the biological father and a member of the Cherokee Nation, signed away custody rights to Veronica’s mother, but subsequently objected when he discovered Veronica had been adopted by Matt and Melanie Capobianco, who are not Native American. Based on several provisions in the ICWA, a family court awarded custody to Mr Brown, and the South Carolina State Supreme Court affirmed the ruling on appeal. The Capobiancos were forced to hand over the child in a tearful parting.

The Supreme Court decision, which could come as early as this Thursday, should be close. Based on their questions during oral argument, Justices Ginsburg, Scalia and Sotomayor are poised to rule for the biological father and Justice Kagan seems likely to join them. But Chief Justice Roberts, along with Justices Breyer and Alito, seem more sceptical that the ICWA gives Mr Brown custody. Justice Thomas, true to form, was mum during the oral argument. Justice Kennedy, also true to form, was inscrutable, lamenting that he couldn’t call upon King Solomon to sort things out.

So a 5-4 or 6-3 decision seems likely. Whichever way the justices rule, they will address (or skirt) some wrenchingly difficult questions. Among them are two biggies:

1. What is a parent? Much of the oral argument revolved around whether Mr Brown should be construed as a mere “sperm donor”—since he had no relationship with Veronica in the first two years of her life—or as a father with full custodial rights under the ICWA. For Justice Scalia, it’s simple: “this guy is...the father of the child...and they’re taking the child away from him even though he wants it.” Case closed. But the attorney for the petitioner insisted that the ICWA doesn’t apply since “there is no Indian family” that the adoption by the Capobiancos was breaking up. Mr Scalia's adamancy about biology is interesting given his ruling in 1988 that the husband of an adulterous wife who conceived and bore a child through her lover was unquestionably the baby’s father in the eyes of the law, genetics be damned. Since the "presumptive father" had cared for the child and exercised parental responsibilities for him, Mr Scalia had reasoned, he was the legal parent despite the lack of a biological connection. All signs point toward Mr Scalia coming to exactly the opposite judgment this time around.    

2. When are racial classifications permissible? Chief Justice Roberts is famous for his faux-tautological contention that “the way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” Justice Scalia has made a similar point time and again, as he did in the Adarand case in 1994:

To pursue the concept of racial entitlement—even for the most admirable and benign of purposes—is to reinforce and preserve for future mischief the way of thinking that produced race slavery, race privilege and race hatred.

Suddenly Mr Scalia seems less perturbed by racial identity serving as the centerpiece of a legal claim. In a brief on behalf of Baby Veronica, Paul Clement, a conservative lawyer representing the child's guardian in the case, points out a connection to Palmore v. Sidoti, an equal-protection case:  

In Palmore, this Court struck down the use of racial classifications to remove a child from an appropriate custody placement. This case is no different. Baby Girl’s Indian blood quantum was the sole reason the lower court ordered her removed from the loving, stable home she had lived in since birth and placed with a biological father whose failure to timely care for her extinguished any parental rights he might otherwise have had under state law or the Constitution.

The Indian Child Welfare Act was designed “to protect the best interests of Indian children and to promote the stability and security of Indian tribes and families.” It is a federal response to America's long and grim history of forcibly removing American Indian children from their homes. In the view of Marcia Zug, a law professor at the University of South Carolina, "without ICWA, the future of American Indian tribes is imperiled." Yet if the ICWA is to protect both the tribe and the child, as it promises to do, the question of Veronica's best interests must be considered as well. If it weren’t for Veronica’s few drops of Cherokee blood, Mr Brown would have had no legal basis for removing her from the custody of the Capobiancos in 2012. When a confused, crying Veronica was taken from her adoptive parents at the age of two, her individual interests were sacrificed to those of the Cherokee tribe. We can argue about whether that move was justified. But now Veronica's circumstances have changed. She is living with her biological father, and the Capobiancos are fading from her memory. Wrenching her away from the parent who has raised her for the past 18 months would only compound Veronica's confusion and double her misery. However the court rules, we can only hope that the sad episode of this Solomonic custody case will not be repeated with other children.

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Rich rewards

the economistMié, 12/06/2013 - 16:52

REMEMBER Richie Rich? The richest boy in Richville was the title character in a popular comic book series from the 1960s to the 1990s, defying stereotypes of wealthy folk while America was on the brink of a three-decade surge in income inequality. Russell Belk characterises the “poor little rich boy” in his analysis of wealth-themed comic books:

Far from being selfish, he uses his wealth to help others. He is not too good to play with poor boys. He has a middle-class girlfriend. And he is even nice to his adversaries—his mean cousin Reggie and the vain and envious Mayda Money, both of whom are also wealthy but extremely spoiled, selfish, and antagonistic.

The son of an industrialist, Richie’s untold wealth neither corrupts him nor leads him to seclusion in a bubble of privilege. He even attends public school. In these ways and others Richie is unlike high-income American children in 2013, whose test scores, college graduation rates, earning potential and wealth prospects are increasingly divorced from those of low and middle-income children. Wealth has always paved a smooth path for the next generation, but the intergenerational transfer of opportunity may never have been as profound as it is today. Here is how Chuck Collins at the American Prospect explains the situation:

The idea that people’s futures might be economically determined deeply offends U.S. sensibilities. We want to believe that individual moxie matters, that a person’s creativity, effort, and intelligence will lead to economic success. Stories of exceptional strivers, heroically overcoming a stacked deck of obstacles, divert our attention from the data. But the large mega-trends are now indisputable. If you fail to pick wealthy parents and want to experience the American dream today, move to Canada.

This is no joke: the people of Australia and Canada have twice the social mobility of their counterparts in America and Britain despite having Gini coefficients in the same ballpark. No one quite knows why, but possible factors include America’s thinner safety net and deeper poverty. Should America abide extreme intergenerational inequality? Friedrich Hayek, an Austrian economist, admitted that conferring “unmerited benefits” on children is “unquestionably one of the institutional causes of inequality.” But bequeathing opportunity, Hayek argued, is what families are all about:

Once we agree that it is desirable to harness the natural instincts of parents to equip the new generation as well as they can, there seems no sensible ground for limiting this to non-material benefits. The family’s function of passing on standards and traditions is closely tied up with the possibility of transmitting material goods. And it is difficult to see how it would serve the true interest of society to limit the gain in material conditions to one generation.  

If we want families to forge fruitful intergenerational bonds, Hayek contended, we have to let parents pass on everything of value to their kids: ethical principles, traditions, habits of mind and, yes, stock portfolios and estate holdings. Banning inheritance, he suggested, would lead parents to pursue perverse strategies in an effort to ensure their kids have a leg up on their neighbours’ progeny. Without the “outlet” of inheritance:

Men would look for other ways of providing for their children, such as placing them in positions which might bring them the income and the prestige that a fortune would have done; and this would cause a waste of resources and an injustice much greater than is caused by the inheritance of property.

Hayek’s interesting slip here is to characterise inheritance as an “injustice”, albeit one that is less objectionable than, say, nepotism or cronyism. This is contrary to his basic position in "The Constitution of Liberty" that “distributive justice” is a misnomer. Apparently even Hayek, on some level, appreciated that disparities of economic opportunity can be undeserved: neither children born to upper-income parents nor those who wind up in lower-income families could be said to deserve their lot. Hayek recognised the moral problem of out-of-the-gate income inequality, but he resisted policies designed to correct it.

A better approach comes from John Rawls, who noted that life prospects are deeply influenced by contingencies of birth, including inborn talents, social class and luck. For Rawls the way society handles those contingencies is the proper subject of political justice:

If we ignore the inequalities in people’s prospects in life arising from these contingencies and let those inequalities work themselves out while failing to institute the regulations necessary to preserve background justice, we would not be taking seriously the idea of society as a fair system of co-operation between citizens as free and equal.

Rawls wanted to find a way for societies to ensure that the financial privileges of one generation didn't extend automatically into the next. He drew an analogy to the world of sport:

The draft rule in a professional sport such as basketball ranks teams in the opposite order from their standing in the league at the end of the season; championship teams go last in the draft of new players.

This is not to suggest that the children of billionaires should be stuck under bridges while the kids of poor people be housed in mansions. But Rawls is correct to draw our attention to the injustices that flow from a political society in which parental wealth dictate a child's life prospects. There are plenty of measures that could disrupt the ever-increasing opportunity gap, including higher estate taxes to limit how much unearned wealth passes on to heirs, and a deeper commitment at the state and federal levels to early childhood education, as Barack Obama proposed this year.

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Leveraging racism

the economistMar, 11/06/2013 - 18:55

A MAJORITY of Americans now favour the legalisation of marijuana. Two decades ago, 80% opposed it. Remarkably, about a third of the swing in public opinion came in just the past three years. It seems the tide has turned. However, William Galston and E.J. Dionne, scholars at the Brookings Institution, warn legalisers not to get too excited. "Support for legalization, though growing markedly", they write, "is not as intense as opposition, and is likely to remain relatively shallow so long as marijuana itself is not seen as a positive good." The trend in favour of legal weed, they observe, is not as inexorable as the trend toward the legal recognition of same-sex marriages.

Much of the support for legalisation comes from the increasingly widespread belief that the benefits of prohibition have not outweighed the costs. Such pragmatism may be enough to shift opinions about the wisdom of legalisation, but it rarely generates the moral passion necessary to overwhelm fervent moral opposition and bring about lasting change. 

From a certain, rarefied liberal perspective (eg, mine), marijuana prohibition violates the individual's right to do whatever he likes with his own body as long as it does no harm to others, and is clearly unjust. The very existence of "victimless crimes" is enough to work me into a lather. Similar views about the injustice of paternalism drive most legalisation activists. Still, this sort of libertarian sensibility is not widespread. So why are views on marijuana changing? Because plenty of consequences of prohibition pique typical Americans.

It's monstrous to deny therapeutic marijuana to AIDS or cancer patients struggling with nausea, or to those who suffer from debilitating chronic pain. And it's fairly easy to engage sympathy and elicit indignation over this sort of cruelty. Drug warriors have often complained that the push to legalise marijuana for medical purposes is largely a pretext for full-blown legalisation, and they're right. Successful legalisation of recreational marijuana in Washington and Colorado came after the drug had become normalised through the medical-marijuana dispensary system. This is no happy accident. I've known a good number of legalisation activists who have fought hard and nobly to increase access to therapeutic marijuana. That they were also healthy, hearty enthusiasts of the drug's recreational uses is not incidental.

Medical marijuana has taken the legalisation movement far, but it may not be enough to tilt the whole country toward legalisation, as Messrs Galston and Dionne seem to suggest. But I'm not sure this means, as they argue, that support for legalisation is "likely to remain relatively shallow so long as marijuana itself is not seen as a positive good". There are other real injustices on which to hitch the cause, and legalisers are already hard at work. Racism is the new medical marijuana.

A new ACLU report, "The War on Marijuana in Black and White", exposes the outrageous inequities in the enforcement of marijuana posession laws. These two graphs make the case.

Note that marijuana use among young whites is slightly higher than among young blacks.

Of course, the ACLU does not go on to demand racial equality in arrests for marijuana possession. It takes the finding of "staggering racial bias" and the fact that billions of dollars have been squandered failing to reduce marijuana use, and concludes that the war on marijuana is a failure. 

This Bill Maher monologue, nominating marijuana legalisation as "the next gay marriage...the next obvious civil-rights issue that needs to fall", beautifully encapsulates the shifting tactics of savvy legalisation advocates. Mr Maher jokes openly (starting at about 2.20) about the sham, de facto legalisation brought about by California's medical-marijuana system, frankly suggesting that concern for the comfort and welfare of the sick and suffering was a pretext for people like him to acquire weed legally. He then goes on to profess solemnly his concern for "the three-quarters of a million people who are arrested for simple possession every year, and the fact that blacks are arrested at seven times the rate of whites, which is a subtle way to suppress the black vote, because 48 states limit voting rights for convicted felons". Marijuana prohibition: racist and undemocratic! You know what? It is outrageous. Legalisation supporters are going to get plenty of mileage out of this. Perhaps it will even push legalisation efforts past the intense moral objections of prohibitionists.

But what about the shameless opportunism of privileged middle-class stoners (or rich ones, like Mr Maher) suddenly up in arms about the systemic racism of the American criminal-justice system? We should welcome it. We should cheer it, even if it begins in bad faith. Indignant exhortation only gets us so far. The best hope for justice is always an alliance with self-interest. It's unlikely that my legalisation activist friends would have come to care much about the cruelty of denying marijuana to the sick, but they came to care, genuinely and deeply. Once they saw the strategic sense of focusing first on the legalisation of medical marijuana, the needless suffering caused by prohibition truly engaged their empathy and compassion. Suddenly, tens of thousands of people too weak to fight for themselves had legions fighting sincerely on their behalf.

The legalisation movement's strategic turn toward the racism of America's criminal-justice system is heartening for similar reasons. Institutionalised racism is America's great wickedness, and it remains braided through everyday American life, but its salience has faded for most. If the prospect of one day smoking a spliff with impunity is what it takes to get college kids outraged about the fact that the war on drugs turned out to be the second coming of Jim Crow, so be it. Sick people don't care why we came to want to help them. The unjustly jailed won't care why we came to set them free. 

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Should the government know less than Google?

the economistMar, 11/06/2013 - 10:34

LET'S get the most contentious point out of the way first: Edward Snowden made the right call to make public the extent of the National Security Administration's surveillance of electronic communications. The American people can now have a debate about whether or not they consent to that level of surveillance in order to prevent terrorist attacks, a debate that we were previously denied by the government's unwillingness to disclose even the broad outlines of what the NSA was doing. There may be some slight risk that knowing more about the breadth of NSA surveillance will lead terrorists to take better precautions in concealing their communications. But that risk seems manageable, and is of far less importance than the ability of Americans, and the rest of the world for that matter, to finally have an honest discussion about how much we think our governments should be able to see of our online behaviour.

So how much access should governments have? Here are a few things to consider:

1. Google's servers have been reading the content of Gmail users' e-mails since the service debuted, in order to serve up user-appropriate advertising and to block spam. Microsoft, Yahoo and all the other major search and e-mail providers do more or less the same thing. If you've watched a YouTube video about barbecue grilling techniques and then you write an e-mail to friends inviting them over for burgers, you should not, in this day and age, be surprised to see an ad for a Fire Magic Aurora 660s portable gas grill pop up in your browser. Google knows what you've been viewing and writing on the internet, and it is happy to sell this knowledge to third-party companies that are looking for consumers like you.

2. Imagine that rather than watching videos about barbecue grilling techniques on YouTube, you have instead been watching videos of beheadings in Pakistan, accompanied by romantic footage of black-flag-waving horsemen riding to re-establish the caliphate. Let's say you then write an e-mail to your brother saying you've acquired most of the materials to assemble the package, except you can't find an affordable pressure cooker. Is it acceptable for Google to contract with Williams Sonoma to send you an advertisement for an affordable pressure cooker based on its knowledge of your viewing habits and the contents of your e-mails? (This is currently the foundation of an entire global industry, so deciding it's not acceptable would have serious economic consequences.)

3. And now the key question: is it okay for Google to use knowledge it gains from searching your e-mails to sell advertising to Williams Sonoma, but not to pass it on to the government when it asks for matches between pressure cookers and beheading videos?

4. This is not a facile question. Many things are legal for private parties but not for the government; maybe this should be one of those things. Or maybe we could decide that it's acceptable for Google to contract browser ads based on user information, but not to pass that information on to third parties, be they private companies or the government, without the user's consent. In that case the government would only be able to ask Google for information on users who have consented to the searches. On the other hand, technical workarounds might render this sort of user-consent mandate irrelevant. And efforts to preserve user anonymity based on demanding consent generally don't work. People usually end up clicking "yes" at some point for something, meaning any privacy guarantees become purely theoretical and functionally irrelevant. The European Union's requirement that websites ask for specific consent before accepting cookies, for example, is a ridiculous time-waster that has accomplished little more than forcing Europeans to spend more of their life's precious seconds clicking useless pop-up windows.

Here's the basic point. In the online world, essentially everything we do is always being archived and searched by the companies that provide us access. There was a time when we might have asked whether those companies should be barred from using that behavioural information for commercial purposes, but that ship sailed long ago. The question we're asking now is whether the government should be allowed to gain access to those private search archives for national security purposes. The government isn't spying on us; Google is spying on us, and the government is asking Google for certain results.

We need to think coherently about what we find scary here. The problem isn't so much that we haven't set up a legal architecture to preserve our online privacy from the government; it's that we haven't set up a legal architecture to preserve our online privacy from anyone at all. If we don't have laws and regulations that create meaningful zones of online privacy from corporations, the attempt to create online privacy from the government will be an absurdity.

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The war on terror is Obama's Vietnam

the economistLun, 10/06/2013 - 13:47

HOW serious is the terrorist threat that justifies the National Security Administration's surveillance of Americans? Edward Snowden, the NSA leaker, doesn't address this question; his point is that the American people should have the information they need to decide whether the threat merits the surveillance. Matthew Yglesias thinks the threat isn't very serious, and that counterterrorism efforts, including surveillance and airport security systems, should be subjected to a cost-benefits analysis. ("Approximately zero lives per year are saved by airport security measures," he writes, though he admits he could be wrong about this.) 

Stephen Walt is a bit less hyperbolic, but he agrees that terrorism simply isn't the kind of danger that could merit the level of response America devotes to it. Unless terrorists get nuclear weapons, he says, they really can't do much damage in America:

Conventional terrorism—even of the sort suffered on 9/11—is not a serious threat to the U.S. economy, the American way of life, or even the personal security of the overwhelming majority of Americans, because al Qaeda and its cousins are neither powerful nor skillful enough to do as much damage as they might like.

He adds that "post-9/11 terrorist plots have been mostly lame and inept, and Americans are at far greater risk from car accidents, bathtub mishaps, and a host of other undramatic dangers than they are from 'jihadi terrorism.'" He uses the Boston bombing in April as a case in point, describing it as tragic but less lethal than the factory explosion that took place that same week down in Texas.

Mr Yglesias and Mr Walt are right: conventional terrorism poses no major threat to America or to its citizens. But that's not really what it aims to do. Terrorism is basically a political communications strategy. The chief threat it poses is not to the lives of American citizens but to the direction of American policy and the electoral prospects of American politicians. A major strike in America by a jihadist terrorist group in 2012 would have done little damage to America, but it could have posed a serious problem for Barack Obama's re-election campaign. For the president the war on terror is what the Vietnam War was to Lyndon Johnson: a vast, tragic distraction in which he must be seen to be winning, lest the domestic agenda he really cares about (health-care, financial reform, climate-change mitigation, immigration reform, gun control, inequality) be derailed. It's no surprise that he has given the surveillance state whatever it says it needs to prevent a major terrorist attack.

In a perfect world, as Mr Walt argues, we in the public wouldn't let terrorist strikes dictate our politics. But we're not likely to get calmer about terrorism, because too many people are trying to keep us frantic. At least three parties stand to gain from exaggerating, rather than minimising, our reactions to terrorist strikes. The first is the media, which wins viewership by whipping up anxiety over terrorist strikes. The second is politicians seeking partisan advantage, since panic over foreign-backed terrorism tends to increase voter turnout. (In Israel terrorism shifts voter support to the right. In America throughout the early 2000s, anxiety over terrorism increased support for president George W. Bush, but by 2008 an attack would have increased support for Mr Obama. Similarly, Spanish voters punished the conservative government for the Madrid train bombings in 2004 because 80% of the public had opposed the government's participation in the invasion of Iraq. Either way, when terrorists attack, one party or the other is going to make political hay out of it.)

Finally, the third party trying to exacerbate our responses to terrorist attacks are the terrorists themselves, who have generally proven quite effective at choosing targets that provoke widespread media coverage. As hard as we may try to restrain our national responses to terrorism, there will be some pretty smart terrorists out there figuring out how to do things that get our attention again. Even the rather inept Tsarnaev brothers, who only managed to kill three people, did an excellent job of picking a target that dominated the news cycle. Had that attack occurred in mid-2012, it would have completely derailed the presidential campaign. Democrats would no doubt have tried fruitlessly to tamp down public reaction, while Republicans would have allied with the media in hyping it relentlessly.

Politicians do not want to have to deal with these sorts of surprises. They have very strong incentives to go along with intelligence organisations that say they need ever-more-powerful surveillance programmes to see what the terrorists are up to. For Mr Obama, this is a no-win situation. The only thing worse than missing a terrorist attack because an NSA surveillance programme had been blocked would be having the NSA leak that the terrorist attack was missed because you blocked their surveillance programme. Now, having given the NSA what it said it needed to prevent any nasty surprises, he finds himself dealing with a different nasty surprise: the leak of the NSA programmes themselves. And that surprise has made the chances of accomplishing anything on the issues Mr Obama really cares about—health care, climate change, immigration reform, inequality—more remote than ever.

Over to the dark side

the economistLun, 10/06/2013 - 08:15

ONCE they have leaked secret information, most whistleblowers do their best to remain incognito. Not Edward Snowden, the 29-year-old tech specialist whose revelations about the extent of the snooping on all kinds of communications by America’s super-secretive National Security Agency (NSA) have rocked the country’s intelligence establishment and sparked calls for a public debate about where the line should be drawn between intelligence gathering and personal privacy in the digital era.

In a video interview published this weekend by the Guardian newspaper, Mr Snowden, who says he is now staying in Hong Kong, explains why he decided to leak details of PRISM, an NSA-run initiative that allows the agency to gather and store vast troves of online data from a range of internet companies, including Google, Facebook and Microsoft.

Justifying his decision to talk to the press, he argues that the American public has a right to know that the NSA has strayed from a narrow focus on foreign intelligence, and has been scooping up and storing huge amounts of information about Americans who have nothing to do with terrorism or other kinds of threats. He says his own concerns about this practice were ignored by the intelligence community, and so he chose to make some information about PRISM public in the hope it will prevent the development of what he calls a “turnkey tyranny”, run by a secretive and unaccountable intelligence bureaucracy.

America’s intelligence community is clearly none too pleased with Mr Snowden’s revelations. According to some reports, America’s Justice Department has already opened an investigation into the leaks and the chairs of the intelligence committees in both houses of Congress have said they expect the whistleblower to be prosecuted if possible. Parallels have already been drawn between Mr Snowden and Bradley Manning, the soldier currently on trial for allegedly passing classified documents to the WikiLeaks website.

Both Barack Obama and James Clapper, America's director of national intelligence, have leapt to the defence of the PRISM system and another initiative involving the gathering of “metadata” about phone calls (which includes things such the calls' duration and the phone numbers involved). They argue that such data-gathering is necessary to safeguard the nation, and that it is conducted within strict legal guidelines. But some lawmakers are asking whether the net has been cast too wide. Senator Mark Udall, a Democrat, has called for a review of the Patriot Act and the legal basis for broad surveillance programmes, such as PRISM.

The furore over PRISM also raises other significant issues. One is the extent to which private companies such as internet firms and phone companies should be expected to share data with the intelligence community—and how they do so. Both Larry Page, the boss of Google, and Mark Zuckerberg, the head of Facebook, have vehemently denied claims that their companies give American spooks "direct access" to data about customers. But they are clearly sharing information in more indirect ways.

Another issue likely to get plenty of attention is the role of private-sector firms in providing services to the intelligence community. Mr Snowden was an “infrastructure analyst” employed by Booz Allen Hamilton, a consulting company that handles many government projects. The firm, which says Mr Snowden had worked for it for less than three months as a contractor in Hawaii, put out a statement saying that if the reports that he leaked information are true, his actions would constitute a “grave violation” of the firm’s code of conduct and its core values.

The revelations about PRISM could also have implications for things such as trade talks between America and the European Union, where issues relating to data privacy have already cropped up. And they could even influence discussions between China and America, regarding cyber-security.

Given all this, it is hardly surprising that Mr Snowden is expecting reprisals for his leak. “I understand I will be made to suffer for my actions,” he says in the video. But he adds that his biggest fear for America is that, in spite of his disclosures about PRISM, nothing much will change.

(Picture credit: Wikimedia Commons)

Big Brother at work

the economistVie, 07/06/2013 - 21:18

OUR correspondents discuss the scale of the government's domestic surveillance programmes and the type of information being collected

Blowing hot and cold

the economistVie, 07/06/2013 - 19:41

ENERGY subsidies have a long history. Governments often argue they are necessary to promote new energies during early developmental stages—think of NASA’s funding for photovoltaics. In America, support like this goes back all the way to land grants for timber extraction in the 1800s. There have been tariffs to support coal, preferential tax treatment for oil and gas, loan guarantees for nuclear power, and so on.

Yet nowadays renewable energy is singled out for the support it receives from the government. Critics focus on 2011, when two-thirds of the $24 billion in energy-related subsidies went to renewable energy and energy efficiency ($6 billion was spent on ethanol), while a mere $2.5 billion was spent on fossil fuels. But this ignores history. One study by a venture-capital group that does green investing suggests that in inflation-adjusted dollars government spending on the nuclear industry averaged $3.3 billion a year over the first 15 years of the subsidies. The equivalent figures are $1.8 billion for oil and gas, and $400m for renewable energy during the first 15 years of their respective subsidies.

One of the main ways the federal government has supported certain types of renewables is through the production tax credit (PTC), which currently offers 2.3 cents per kilowatt-hour of electricity generated. Take wind power: once a turbine is up it can receive this credit for a decade. But, critically, this incentive comes and goes rather like the wind (see our report). Since 1992 it has been extended six times. Last year was a record-setter for wind power in America, but this was partly a result of the race to qualify for the PTC before it expired. Thanks to heavy industry lobbying, yet another one-year extension, worth $12 billion, emerged from the fiscal-cliff deal this year. 

This is no way to set energy policy. Countries use an array of tools to foster the growth of new energy sources, which typically have long R&D horizons. Tax credits, quotas, deductions, exemptions, pilot projects, guaranteed prices and guaranteed demand are all examples of creative market interventions. But the one factor that is always needed is predictability. The costly process of building an infrastructure is difficult with sporadic support.

Wind is a promising new power source, but the industry needs to know, six years from now, what level of federal support it will have. One answer may actually be zero. Wind companies want a six-year phase out of the PTC. This would bring greater certainty to the industry and allow firms to invest more in R&D and domestic manufacturing to bring the price of wind power down. That has been the experience in Germany which expects to reach grid parity for wind by 2015.

Grid parity—when renewables are as cheap or cheaper than existing sources of energy—is within reach in America. The benefits will be immense. Public support for renewable energy remains high; wind and solar power are easily the most popular forms of energy in America (coal comes last). The politics, too, are less obvious than one might think. Many deep-red rural states such as South Dakota, Nebraska and Kansas rather like wind power. These states have enormous wind resources and even though many of their politicians are sceptical about climate change, they are keen on the wind industry (and the PTC). Wind power allows rural states to diversify their economies and bring well-paying jobs to locations with little else going for them.

With another dry year feared in many agricultural regions, concerns about the climate are not going away. Nor is the idea that the problems of climate change—driven by carbon-based energy sources—are the biggest hidden subsidy of all. When stacked up against the cost to taxpayers of disasters related to climate change, renewable-energy subsidies seem like a rather good deal.

(Photo credit: AFP)

You can't spend your way out of a prisoner's dilemma

the economistVie, 07/06/2013 - 14:59

OVER at Ezra Klein's Wonkblog, Neil Irwin has an interesting interview with Glenn Hubbard, the former head of the Council of Economic Advisers under George W. Bush and now dean of Columbia Business School. Mr Hubbard and Tim Kane, an economist, have a new book out arguing that America has some deep-seated problems that it needs to deal with. One of these problems, they think, is that America needs to reform its budgeting process to bring the expenditures and revenues of the modern welfare state in line with each other. Somebody else can take that one up. I'm interested in Mr Hubbard's recognition that something systemic is driving America's political system into an unmanageable degree of partisan polarisation, and that there needs to be reform, including possibly changes to the constitution, to address it. Here's the nut graf, as we say in the dwindling cult that is the newspaper business:

On politics, we talk about an arc from post-Nixon era campaign finance reforms that gave the two political parties a duopoly over raising large amounts of money. It made it very difficult for competing views to get much traction. At the same time polarization was happening in the Congress. So these two polarizing entities [the two major parties] have a lock on fundraising. All kinds of political science research shows that the optimal number of parties in a political system like the U.S. is two. But it doesn’t have to be these two. How do you have a contest for ideas in that context?

We argue that Citizens United [the Supreme Court decision forbidding many restrictions on businesses and entities to support political candidates] is good in that respect. It creates much more of a contest of ideas.

Mr Hubbard is absolutely right that America's political system has moved towards an unmanageable level of polarisation, and that this is rendering it impossible for the country to manage many basic tasks, let alone implement fresh policies to address new social and economic realities. He's also right that the nature of these problems is systemic. America's crippling polarisation is not fundamentally driven by the craziness of Michelle Bachmann, crazy though Michelle Bachmann may be. The polarisation is structural, and if it can be tackled at all, it can only be tackled structurally.

That said, Mr Hubbard seems to be telling a very weird story about what those structural factors are and how they came to be. He traces the political duopoly of the Democratic and Republican parties to post-Nixon-era campaign-finance reforms. But what were these other political parties in the pre-Nixon era that were able to raise large amounts of money and give traction to competing political ideas? The Republican and Democratic parties have had a duopoly in American national politics since the Civil War. Other parties have been competitive on a state or regional basis, sometimes for a few decades at a stretch, including the Farmer-Labor and Progressive parties in the upper Midwest in the early 20th century. But they never elected more than a few senators or representatives to Congress; by that standard, heck, there's a Socialist from Vermont in the Senate right now.

When Mr Hubbard says that two is the "optimal" number of political parties in an American-style system, he presumably means that first-past-the-post systems tend to result in a two-party field, ie Duverger's law. (Whether this is "optimal" depends on what your goals are.) It's worth noting that while this thesis was once widely accepted, it's been increasingly controversial since the 1990s: as Gary Cox argued in "Making Votes Count", first-past-the-post encourages two-party fields at the district level, but there's no clear reason why you shouldn't have different two-party fields in every district and hence lots of parties at the national level, as is in fact the case in many countries. Patrick Dunleavy, a political scientist at the London School of Economics, argues forcefully that Duverger's law actually applies only to America; Britain, India, Canada and other Westminster countries all have multiparty systems, due in part to strong ethnic or regional parties (like the Scottish and Welsh independence parties) and in part to...whatever leads people to vote for the Liberal Democrats.

Mr Hubbard seems to be suggesting that Citizens United creates an opportunity for very wealthy donors to come together, blow a bunch of money building a new political party, and supplant one of the existing ones. Given that this didn't work in the 110 years before the campaign-finance reforms of the 1970s, it's not clear why it would work now. (Interestingly, Mr Dunleavy proposes the exact opposite: he hypothesises that the relatively loose regulation of political spending in America is one of the reasons it has a two-party system.) So far, the post-Citizens United developments don't favour Mr Hubbard's thesis. The Fix the Debt coalition, which fits the model of a deep-pocketed organisation outside the partisan system, appears to have accomplished essentially nothing, and as Kevin Roose writes its political momentum is ebbing already, largely because its goal of rapid deficit reduction is already happening. Americans Elect, the centrist third-party vehicle which fit Mr Hubbard's model even more closely, never even managed to find a candidate last year. As Ross Douthat noted perceptively at the time, the new political energy that has arisen outside the party system since 2009 has "mostly appeared on the right- and left-wing fringes of the two parties rather than in the space between them—in the Tea Party’s backlash against bailouts and spending and in the Occupy Wall Street revolt against Wall Street’s political influence." While Citizens United played some role in facilitating the tea-party movement, it wasn't crucial, and it obviously played no role in the Occupy movement. Both of these movements undoubtedly met Mr Hubbard's goal of introducing fresh ideas into the political discourse, but they both heightened political polarisation rather than reducing it.

There's one constitutional change that could, as Mr Hubbard suggests, unlock the crippling polarisation in American politics: a switch to a proportional-representation or single-transferable-vote system in one house of Congress. That would make multiple parties viable, which in turn might open space for more ideological variance, force the parties to form coalitions and compromise more often, and deny any one party the ability to block all legislation. But there is no possibility whatsoever that it will happen.

In the meantime, if Mr Hubbard is looking for the structural sources of polarisation, there are two ways to describe them. The first is that such polarisation is the normal state of affairs in a two-party system, but was masked by the cross-party valences of racism in the pre-Civil Rights era; now that the South is Republican and ideological loyalties line up more neatly, what we need is a British-style Westminster system in which the majority party can rule despite polarisation. Another way to describe the problem would look at the rise of multi-channel political media, first radio and television and more recently social media, where political-media creators (be they cable-news hosts or everyday bloggers and twitterers) are rewarded for ideological herding with increased audience share. Either way, letting rich people and wealthy corporations or organisations spend unlimited amounts of money on political communication seems unlikely to reduce polarisation, introduce new ideas or coalitions, or overcome the bitter impasse in which American political life finds itself.

Michael Lind's bad argument against anything

the economistJue, 06/06/2013 - 21:06

IF WOMEN'S suffrage is such a great idea, why hasn't anyone tried it? If the Westphalian nation-state is so brilliant, why don't we see any amidst all these empires and principalities? If social insurance is so damn smart, why didn't anyone think of it before? Obviously, this is a silly, fallacious pattern of argument. Every good idea was at one point untried. Nevertheless, Michael Lind seems to think similar reasoning really puts libertarians in a corner:

Why are there no libertarian countries? If libertarians are correct in claiming that they understand how best to organize a modern society, how is it that not a single country in the world in the early twenty-first century is organized along libertarian lines?

[...]

If libertarianism was a good idea, wouldn’t at least one country have tried it? Wouldn’t there be at least one country, out of nearly two hundred, with minimal government, free trade, open borders, decriminalized drugs, no welfare state and no public education system?

One doesn't have to be fond of libertarianism to imagine perfectly sound answers. When I was a libertarian, I might have said that there are no libertarian countries because too few people have been persuaded to become libertarians, just as at one point in our history too few men had been persuaded to support women's suffrage. When enough have been persuaded, it will be tried. But there are many other reasonable answers. How about: all habitable terrestrial real estate is already controlled by entrenched modern nation-states, the interests of which are directly threatened by the principles of libertarian government. If a colonisable "frontier" existed, libertarian government would be tried. Something like this is the thinking behind the movement to build artificial islands, or "seasteads", upon which to try libertarianism and other experiments in political organisation. 

On the question of natural experiments, Mr Lind manages to get himself even more confused:

If socialism is discredited by the failure of communist regimes in the real world, why isn’t libertarianism discredited by the absence of any libertarian regimes in the real world? Communism was tried and failed. Libertarianism has never even been tried on the scale of a modern nation-state, even a small one, anywhere in the world.

Why does Michael Lind keep asking questions that have obvious answers? A hypothesis that has not been tested is neither confirmed nor disconfirmed. One may reasonably complain that a hypothesis is unfalsifiable. But it is simply bizarre to maintain that a hypothesis might be discredited because it has yet to be tested, because it is so far neither falsified nor confirmed. Such a principle would entail the absurdity that all hypotheses were discredited at the dawn of time.

Now, it's interesting to note that many political philosophers argue that the point of political philosophy is to articulate a theoretical ideal, an abstract lodestar by which to steer deliberation and reform. To advocates of so-called "ideal theory", questions of empirical feasibility are of limited relevance. The late G.A. Cohen famously argued that socialism is "intrinsically desirable", which we discover through philosophical reflection, even if we find that it is empirically infeasible. The impracticability of the ideal simply means we shouldn't try to realise it in its pure form. Of course, an ideal-theorising libertarian can go the same route and argue that the examination of thought experiments reveals the intrinsic desirability of libertarianism, empiricism be damned. Ultimately, this sort of theorising produces nothing but dogmatic table-pounding and sometimes amusing expressions of incredulity. We should leave this sort of thing to the schoolmen and the benighted apprentices. 

However, an excess of empiricism can lead to the opposite error of thinking the best we can do is the best we have done. The best we have done is one form or another of the liberal-democratic, capitalist social-insurance state. And here we are. So no worries!

No, we have plenty of worries, and we're right to have them. We can surely do better. Yet I would suggest that squalid empiricism is rather more useful for guiding our thinking about political economy than empyrean abstraction. Indeed, our ability to evaluate socio-political systems more than a little different from existing systems is so absolutely abysmal that it suggests its own ideal. What we require is a political order which, recognising the severe limits on foresight and imagination, makes room for the exploration of new possibilities, and develops a capacity for recognising and integrating successful experiments. No, I don't really know how to do that, but it's ideal enough to offer a vision of life beyond the status quo.

The ideal of anti-theoretical experimentalism leads me to a preference for policies that promote the sort of cosmopolitan pluralism in which cultural synthesis and invention thrives. It leads me to favour decentralised authority over monumental central administration. It leads me to suspect that it would be better if America were twelve separate countries, or had 200 states. It leads me to think seasteads are a great idea. Sooner or late, one of them might try something sort of like libertarianism. I predict actually-existing libertarianism would either collapse into a sort of neo-feudalism or develop into a boring variant of neo-liberalism. But maybe not! Maybe we'll be surprised. Maybe we'll see something new. The only way to know for sure is to run the experiment (Mr Lind's exotic epistemology notwithstanding). And the only way the world is going to countenance these sorts of experiments is to get lots of people really fired up about the value of experimentalism. Since that's a lot like getting kids fired up about brussels sprouts, I'm not optimistic. But even empiricists dream.

Why we fear broad surveillance

the economistJue, 06/06/2013 - 18:39

WHEN the brouhaha over the Department of Justice reading the e-mails of James Rosen, a Fox News reporter, broke last month, I wrote that it seemed quaint to be outraged about the department getting a warrant from a judge for a specific target (and eventually disclosing the warrant) when other agencies can obtain secret authority for much wider surveillance. What I wanted to write was that the National Security Agency (NSA) was doing the same sort of thing all the time. But I couldn't do that because I didn't know whether it was true, such surveillance being, you know, secret. I assumed that the NSA had probably been routinely accessing vast amounts of electronic communications from millions of Americans ever since we first learned this was happening under the Bush Administration. With the agency building a $2 billion facility in Utah to process multi-yottabyte quantities of data from its Global Information Grid, complete with the world's fastest decryption supercomputer, one assumes it's doing so for a reason. But we didn't officially know anything about exactly what information the NSA was harvesting.

So now we know a tiny little bit. As my colleague outlines and the Guardian reports, on April 25th the NSA got a warrant from the Foreign Intelligence Surveillance Court ordering Verizon to pass on records of all calls made on its network until July 19th. Verizon must give the NSA the numbers of the caller and the person called, the caller's location, and the time and duration of the call. There doesn't seem to be any reason to believe that Verizon is the only network the NSA is monitoring, or that April-July is the only period they're monitoring. (Dianne Feinstein, the chairman of the Senate Intelligence Committee, hints that this has been going on for seven years.) It seems entirely plausible that the NSA is simply recording everyone's calling data and locations, all the time, and that the court is approving warrants for them to do so. 

This casts a bit of a new light on the controversy years back over the Bush Administration's warrantless wiretapping programmes. If the FISA court is willing to approve surveillance this broad, it's hard to see why the administration ever wanted to circumvent it. On the other hand, if the court is willing to approve surveillance this broad, and the NSA doesn't have to disclose the fact of that surveillance, it's hard to see what the point of subjecting such surveillance to a court is. Hopefully the court would be much more leery of approving a warrant allowing the NSA to actually pore through the contents of everyone's phone calls, and perhaps enforcing that barrier is the court's raison d'etre.

But one thing I haven't seen enough of in the coverage of the latest surveillance scandal is a reminder of what it is we're afraid of when the government collects such immense amounts of data in sweeps of our personal information. It's not the totalitarian fear that an agency that knows exactly where we are and who we're talking to at all times would find it easier to round us up; we're not a totalitarian state, and in any case, in modern America, if the police want to arrest you, they'll be able to find you. The legitimate fear boils down to two things.

The first is the possibility of illegitimate pressure based on information we didn't intend to be made public. Everyone has secrets; everyone has things they'd prefer not be publicly known. If a detective who suspects you of committing a crime knows that when your wife called you at 11.30pm on Wednesday you were at the apartment of your attractive co-worker, that detective is likely to threaten to release that information to convince you to sign a confession. This problem is exacerbated by the fact that when we say "the government", we are actually referring to huge numbers of different agencies and individuals, each of which have their own interests and will use whatever information resources they get their hands on to pursue those interests.

The second is the fear that a pattern of circumstantial activity will lead us to be falsely incriminated, or to suffer administrative penalties that don't even require any actual indictment. In the era of the no-fly list, it's not clear what set of activities are enough to get you to pop up on somebody's computer screen at DHS and turn your life into a Kafkaesque hassle-dome. Did you visit Qatar, then Pakistan, then Qatar again? Did you spray-paint artistic graffiti on a sidewalk that turned out to be too close to Dick Cheney's daughter's house? We don't know; our security agencies will never tell us. Giving the NSA a vast database of phone calls, and inviting them to search for correlations that might be predictive of terrorist activity, is likely to generate a massive number of false positives.

It's not just the government that we need to watch here; the phone companies themselves routinely store call and location data from your phone, aggregate it, and sell it to third parties. Hopefully the FCC will ban that practice except with user consent, when it votes on it later this month. It would also be a good thing if the NSA were blocked from routinely mining patterns from every phone call made in America in the hopes of finding something that matches up with terrorism. Another approach would be to see whether we can erect clearly enforced firewalls that prohibit the NSA from sharing its knowledge that you were in bed with your mistress with prosecutors. Then again, the fact that different intelligence agencies weren't allowed to pool their knowledge was precisely what outraged Americans in the aftermath of the September 11th attacks.

And as for reining in the data-gathering activities, I'm a bit sceptical that blocking the NSA's routine court-monitored requests will go very far towards curtailing their other mind-boggling data-harvesting efforts. A while back I had a conversation about this with a longtime digital-freedom hacktivist who had initially been a senior advisor in the WikiLeaks project. I asked him what he thought were the most important political projects to protect online privacy and organisational openness. He said that ship had sailed; it was too late to carve out a zone of electronic freedom. The architecture had already been defined; the telecoms corporations and the government can learn whatever they want about you, and there was no way to undo what had been built. So, I asked, how did he plan on protecting himself against America's crusade against WikiLeaks? He didn't, he said. He had a family to consider. He'd dropped out.

(Photo credit: AFP)

Now listen here

the economistJue, 06/06/2013 - 17:53

This post has been updated

CIVIL-LIBERTIES groups in America have long suspected that the government has been engaged in widespread surveillance of the phone calls that people make. But they haven’t been able to back up their suspicions with concrete evidence. Now they may have the proof they have been looking for.

According to a report in the Guardian newspaper, America’s National Security Agency (NSA) has been receiving information on a daily basis about all calls made by customers in the United States of Verizon Business Network Services, an arm of Verizon Communications, one of the country’s biggest telecom firms. A separate report, in the Washington Post, reveals that the NSA and FBI "are tapping directly into the central servers of nine leading US Internet companies, extracting audio, video, photographs, e-mails, documents and connection logs that enable analysts to track a person’s movements and contacts over time". Many of the firms mentioned in the latter report have denied involvement in the programme.

The Guardian report is based on a leaked court order that instructs Verizon Business Network Services to collect telephony “metadata” and to hand it over to the NSA. The information collected includes the phone numbers of callers and recipients, the unique identifier numbers of phones used on calls, and the time and duration of the conversations. The Post report describes a surveillance programme code-named Prism, which is meant to target foreigners but seems to collect a good deal of purely American content. The programme is said to be the most prolific contributor to the president’s daily intelligence briefing.

Although the order described by the Guardian, which was issued under the aegis of section 215 of the Patriot Act, doesn’t let the NSA see the content of individual calls, civil-liberties groups argue that by gathering metadata about them, intelligence agencies can use this to help build a detailed profile of callers using information from other sources, such as online social networks, that might fall under the Prism programme. It seems highly likely that other American telecoms companies—and other arms of Verizon—have received similar orders.

The top two leaders of the Senate Intelligence Committee—Dianne Feinstein, a Democrat from California, and Saxby Chambliss, a Republican from Georgia—portrayed the telecom surveillance as old news. "As far as I know, this is the exact three-month renewal of what has been in place for the past seven years," Ms Feinstein said. Mr Chambliss noted that "every member" of the Senate had been advised of the programme, and that no citizen had registered a complaint (though it's not clear how they would've known to). "It has proved meritorious", Mr Chambliss claimed, "because we have collected significant information on bad guys, but only on bad guys, over the years."

Others are more concerned. Ron Wyden, a Democratic senator from Oregon, has long complained that the government was not fully disclosing the extent of its snooping. He and Mark Udall, a Democratic senator from Colorado, have in the past accused the government of using "secret legal interpretations" to justify a surveillance programme that would leave Americans "stunned" were it made public. When previous changes to the Foreign Intelligence Surveillance Act were up for renewal last year, Mr Wyden introduced an amendment that would have required the government to disclose the number of American citizens caught up in its surveillance. It failed, but the law was renewed.

The new revelations will heap further pressure on the Obama administration, which recently came under fire when it emerged that the Justice Department had quietly obtained information on phone calls made by some reporters at the Associated Press, a news agency. One civil-liberties group, the Electronic Frontier Foundation, which has long argued the government is involved in a “dragnet” approach to spying on Americans, has called for a “national dialogue about rights in the digital age”. The sooner this takes place the better.

Read on: Why we fear broad surveillance

Action women

the economistMié, 05/06/2013 - 22:12

JUST over a decade ago Samantha Power, a journalist aghast at American inaction over genocide in Rwanda, confronted dozens of high-ranking officials about why the Clinton administration had stood by and watched the killings unfold. One interviewee, Susan Rice—then an up-and-coming staffer at the National Security Council—confessed that she had sworn a private oath: if ever faced with such a crisis again, she would “come down on the side of dramatic action, going down in flames if that was required.”

On June 5th Barack Obama, a president with a deep wariness of entangling military actions abroad, named Susan Rice (second from right, above) as his national security adviser, promoting her from her current post as America’s ambassador to the UN. The national-security job makes Ms Rice the president’s foreign policy briefer, gatekeeper, troubleshooter and chief broker in inter-agency wrangles over foreign policy and security. For good measure, he named Samantha Power (right, above), until recently a presidential adviser on multilateral affairs and human rights, as America’s new UN ambassador.

Ms Rice will replace Tom Donilon, a low-profile master of the Washington bureaucracy known for caution, ferocious loyalty to the president, and an unwavering attention to the domestic political implications of foreign-policy crises under his care. Mr Donilon will step down in early July after overseeing the informal summit between Mr Obama and President Xi Jinping of China. He will leave detractors as well as admirers in Washington, after bruising clashes with the Pentagon and other agencies, notably in 2009 when he pushed for a much smaller number of American troops in Afghanistan than military chiefs had requested.

The appointments of Ms Rice and Ms Power were long-trailed, but were announced with unexpected suddenness. They place two liberal interventionists at the heart of a White House machine which was known, until now, for resisting calls to intervene in such crises as the civil war in Syria. The two women proved to be effective allies in Mr Obama’s first term; they were credited by diplomats with dramatically shifting American policy over Libya in the direction of the NATO-led air strikes that helped topple the Qaddafi regime.

Members of Mr Obama’s inner circle have been making more hawkish noises about the dangers of inaction in Syria, fretting that a prolonged fight between the Assad regime and disparate rebels could see chemical weapons and other nasties falling into the hands of extremist factions, some loyal to al-Qaeda. The secretary of state, John Kerry, is said to be among those who would like to see more help, including military kit, sent to more moderate figures in the Syrian opposition.

The departure of Mr Donilon removes a voice of caution from White House debates on Syria. Yet his retirement, on its own, cannot be decisive in shifting Syria policy: the president remains in the room, and his personal caution runs deep.

A forthright sort, Ms Rice has rowed in the past with such prominent Republicans as Senator John McCain of Arizona. Since September 2012 she has been caught up in partisan crossfire, accused by Republicans of misleading the American public by delivering a false account of deadly attacks on American missions in the Libyan city of Benghazi. Although Ms Rice was reading talking points drafted by others, Republican anger was enough to make her withdraw from consideration as secretary of state to succeed Hillary Clinton. Her new post as national security adviser does not require Senate confirmation. A dilemma for Republicans is that Ms Rice could be an ally for a more interventionist world view. Mr McCain said that he disagreed with Ms Rice’s appointment, but would make “every effort” to work with her.

Ms Power will require Senate confirmation and has been tagged as “dangerous” by conservatives, who cite her enthusiasm for UN-led interventions and criticisms of some Israeli policies. Though the administration is said to be confident that she will be confirmed, it may be bumpy.

Announcing his new team, Mr Obama gave little away about whether they signalled a shift in policy. He hailed Ms Rice and Ms Power for combining moral passion with pragmatism, and for believing in America’s indispensable leadership while being “mindful” that power must be exercised responsibly. Ever the law professor, Mr Obama admires balance, even in foreign policy. The world, a messy place, may have other ideas.

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