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Click and pay

the economistMié, 03/04/2013 - 16:10

THE past few years have brought little relief for pinched state finances. But on March 22nd 75 senators, including majorities of both parties, approved an amendment to a proposed federal budget which, if enacted, would allow states to collect taxes on sales by internet retailers based in other states.

It makes no economic sense to tax sales in shops and over the internet differently. The prohibition is constitutional. In 1992 the Supreme Court ruled that states could not force out-of-state retailers to collect tax on sales to residents unless Congress, which oversees interstate commerce, said so. Only retailers with a physical presence—a “nexus”, in the legal jargon—in the state could be taxed.

The economic consequences were relatively minor before Amazon and eBay appeared. Not any more. Since 1994, mail-order and internet sellers have grown from 2% of total retail sales to 7%. In the past five years, while retail sales have risen by 10% and total state and local taxes by 9%, sales-tax revenue is up just 2%. The National Conference of State Legislatures reckons that the court’s prohibition cost states $23 billion in lost taxes last year.

In theory, online customers are required to pay sales tax themselves. Unsurprisingly—since there are no means of enforcement, and no customs stations on state lines—few do. This galls traditional retailers like Best Buy and Target, who must charge tax not only in shops but also online in states where they have stores.

States have tried to find ways round the court’s ruling. Illinois redefined “nexus” to include local third-party affiliates who sell through larger web outfits, such as Amazon. Colorado ordered retailers to send customers a tax bill and report them to the tax collector. New York has defined “nexus’ to include any shop that can be reached by clicking through on a New York-based website. All have faced legal challenges: Illinois and Colorado have lost in court, although New York’s tactic has recently been upheld.

Retailers and state and local governments have long recognised that the ideal solution would be for Congress to allow states to tax the internet. But previous legislative efforts have stirred furious opposition from anti-tax activists and discomfort among many Republicans, who think this sounds like a new tax. Although the activists remain opposed, Republicans are increasingly sympathising with retailers and with local governments that are trying to build public works, such as sewers, while their tax base migrates into cyberspace. “You can’t flush your toilet over the internet,” says Mike Enzi, a Republican senator from Wyoming who spearheaded the amendment with Dick Durbin, a Democrat from Illinois.

The Marketplace Fairness Act, as the proposal is called, allows states that simplify their sales-tax laws to compel online retailers to collect taxes. In preparation for passage, 24 states have joined a coalition that harmonises and simplifies sales-tax collection, for example by using common definitions of goods that are subject to tax. That would soothe e-tailers’ worries about collecting different taxes in thousands of state and local jurisdictions. Amazon, one of the fiercest opponents of state-level efforts to collect internet taxes, backs the federal law, while warning against too high a threshold for exempting small sellers, now set at $1m. EBay, on the other hand, opposes any bill without a “robust” exemption. The law would not overturn the federal prohibition on taxing purely digital goods, such as internet access and e-mail.

Although a similar bill has bipartisan support in the House of Representatives, House leaders have yet to get behind it. Even the Senate must find another way to pass the legislation, since the March budget resolution is non-binding. Advocates believe that the best hope may lie in comprehensive tax reform. Buried in a slew of more sweeping changes, a heavier touch on e-commerce might go unnoticed.

(Photo credit: AFP)

The "Thank You" Tweets

Tom PetersMar, 02/04/2013 - 18:25
Got going on Twitter re "Thank You"-power. Herewith the riff. Brackets at the end of a tweet are the source... Tom Peters

It shouldn't be so hard

the economistMar, 02/04/2013 - 16:01

IN 2010 a panel created by the White House estimated that American taxpayers spend 7.6 billion hours and some $140 billion a year keeping the IRS off their backs. According to the Washington Post over 80% of taxpayers use software or pay someone to file their taxes. The national taxpayer advocate, a sort-of in-house IRS watchdog, once said, "If tax compliance were an industry, it would be one of the largest in the United States." But of course, it is an industry.

It is an industry made up of accountants and companies like H&R Block and Intuit, which makes the TurboTax software used by many Americans. And it is an industry that, according to ProPublica, has worked hard to keep the IRS from preparing your tax returns for you for free. Intuit, for example, has spent millions lobbying the federal government, opposing bills that would allow the IRS to send you pre-filled-in returns (the agency already has most of your relevant information) and supporting bills that would ban the practice.

A large number of Americans might cringe at the idea of allowing the IRS to prepare their tax returns. The agency would likely err on the side of higher taxes, right? But such a system is already in place in many European countries (where the tax codes are admittedly simpler) and there are few complaints. The system would work something like this: the IRS would use the information it already has to fill in a standard return (a rather effortless process for the government), which would then be sent to you to accept, edit or reject and replace with a new return if you think you can do better.

For those with simple tax returns the system would save enormous amounts of time and a bit of money. Most of us, though, would likely reject the IRS effort and still file our own returns using software or tax preparers. Since that's what we're doing anyway, it's no skin off our backs. It may seem odd for a company like Intuit to lobby against such a system, seeing as it (like many of its competitors) already offers free tax software for filers with easy returns. But on top losing customers who might needlessly pay for the premium goods, it would lose the ability to hook taxpayers on their products before their lives, in the eyes of the IRS, get more complicated. (It's generally easier to stick with one brand of tax software, as opposed to jumping around each year.)

A business protecting its interests in Washington is nothing new. The dynamic here is actually quite familiar to tax analysts. Intuit stands to lose a lot more than any individual taxpayer stands to gain from IRS-prepared returns. It is this same dynamic that keeps America's byzantine tax code, which is the underlying problem, in place. The code is a complicated mess because the gains any individual taxpayer might experience from reform pale in comparison to the losses that would be experienced by certain interest groups. As Jonathan Bernstein puts it, "Revenue-neutral tax reform almost certainly creates marginal winners and solid losers, which means that tax reform legislation produces intense opposition and mild support."

That is why politicians, like Paul Ryan, speak of tax reform in vague (unrealistic) terms. The details would provoke outrage from groups with armies of lobbyists who are willing to storm Washington in order to hang onto their favourable treatment. Just look at the effort put forth by Intuit. The suffering masses, meanwhile, will remain home, quietly cursing each question posed by their TurboTax software.

(Photo credit: AFP)

Rank discrimination

the economistJue, 28/03/2013 - 19:40

YESTERDAY in the New York Times, Peter Baker explored the irony of the accelerating acceptance of same-sex marriage in America. “Gay rights advocates,” he wrote, “may become a victim of their own political success.” With nine states and the District of Columbia now permitting same-sex unions, nationwide popular opinion swinging in favour of marriage equality and more and more political figures—even some conservative legislators—withdrawing or muting their opposition, gay-rights lobby groups have achieved more than they could have possibly dreamt in the past decade. Yet this success makes it harder to present gays and lesbians as a politically oppressed class deserving of special judicial protection. Here is how Mr Baker put it:

[M]omentum in the political world for gay rights could actually limit momentum in the legal world. While the court may throw out a federal law defining marriage as the union of a man and a woman, the justices signaled over two days of arguments that they might not feel compelled to intervene further, since the democratic process seems to be playing out on its own, state by state, elected official by elected official.

Forty years ago in Frontiero v Richardson, the Supreme Court considered an episode of gender discrimination in a very similar political context. It was 1973, the height of the second-wave feminist movement, and women’s liberation was in the air. Billie Jean King, the American tennis star, defeated the woman-bashing Bobby Riggs in a challenge match, prompting Howard Cosell to call the event "a cause célèbre, equal rights for women". It was also the era of Roe v Wade and the Equal Rights Amendment (ERA), one of only six proposed amendments in American history that would garner the required two-thirds vote in Congress but fail to be ratified by the requisite number of states.

In this charged atmosphere, an air-force lieutenant, Sharon Frontiero, sued when the military denied her application for health and housing benefits for her husband. According to the military rule, in order for a servicewoman’s spouse to be granted benefits, she had to prove that he was dependent on her for more than half of his support. Since Sharon’s husband Joseph could not, he did not qualify as a “dependent”. But if Sharon and Joseph’s roles had been switched, the benefits would have flowed without question: the wives of servicemen were automatically assumed to be their husbands’ dependents.

The Supreme Court found the discriminatory policy to violate the constitution, but in their decision, a majority of the justices refused to use “strict scrutiny” as the adjudicative standard. The low-bar “rational basis test”, used by the justices to invalidate unequal treatment of women for the first time two years earlier, was enough to identify the discrimination: the military could not prove any benefit from treating female air-force officers differently from their male counterparts.

This may be just how the Supreme Court will handle the challenge to the Defense of Marriage Act (DOMA), argued on Wednesday. This case, like Frontiero, is really about benefits. It concerns the myriad federal rights and protections—from the estate-tax exemption to immigration rights—that legally married same-sex couples lack. What could be the government’s reasonable cause for excluding gays and lesbians from these benefits? As Justice Ginsburg put it in a question to the lawyer defending DOMA, in Reed v Reed, the 1971 case serving as precedent for Frontiero, “the Court said this is rank discrimination and it failed” to pass the minimal scrutiny of the rational basis test. Three years after Frontiero, the court adopted a new standard of heightened scrutiny for gender and sex classifications (ironically, in a case involving discrimination against young men), but it has never used anything but the rational basis test when examining discrimination by sexual orientation. It appears that the Supreme Court need not endorse the view of the Second Circuit Court of Appeals that heightened scrutiny be applied in order to nullify DOMA’s federal definition of marriage as between a man and a woman.

The lesson of Frontiero suggests why the justices may demur from announcing a heightened standard of review in the marriage cases, and why gays and lesbians outside of California may not win a univeral right to marry throughout America. Back in 1973, the American Civil Liberties Union laywer arguing Frontiero’s case, a young Ruth Bader Ginsburg, came up one vote shy in her effort to get the court to view gender discrimination as worthy of extra judicial scrutiny. Given the surge of interest in addressing women’s rights in the early 1970s, Justice Powell wrote on behalf of two fellow justices, the time was not ripe:

There is another, and I find compelling, reason for deferring a general categorizing of sex classifications as invoking the strictest test of judicial scrutiny. The Equal Rights Amendment, which if adopted will resolve the substance of this precise question, has been approved by the Congress and submitted for ratification by the States. If this Amendment is duly adopted, it will represent the will of the people accomplished in the manner prescribed by the Constitution. By acting prematurely and unnecessarily, as I view it, the Court has assumed a decisional responsibility at the very time when state legislatures, functioning within the traditional democratic process, are debating the proposed Amendment. It seems to me that this reaching out to pre-empt by judicial action a major political decision which is currently in process of resolution does not reflect appropriate respect for duly prescribed legislative processes.

This is exactly the worry many of the justices seemed to voice during Tuesday’s oral argument: it would be unwise to intervene judicially in a nationwide conversation that seems to be heading inexorably toward more widespread legal recognition of same-sex unions. The next paragraph in Justice Powell’s Frontiero concurrence—even if it wasn't to be for the ERA—is entirely apposite to this week’s cases:

There are times when this Court, under our system, cannot avoid a constitutional decision on issues which normally should be resolved by the elected representatives of the people. But democratic institutions are weakened, and confidence in the restraint of the Court is impaired, when we appear unnecessarily to decide sensitive issues of broad social and political importance at the very time they are under consideration within the prescribed constitutional processes.

Rand Paul's reasonableness

the economistJue, 28/03/2013 - 15:45

IN A disdainfully emotive column on the rise of Rand Paul, a senator from Kentucky, Frank Bruni of the New York Times writes:

When you’ve got loons the likes of Ted Cruz and Sarah Palin fluttering about, I suppose it’s easy not to seem like such a wacko bird yourself.

Is that why Rand Paul is flying high right now? Or is it because he followed his 13-hour filibuster — that knee-defeating, bladder-defying moment in the Senate sun — by showing a few of his less florid feathers? Either way, he has managed, with remarkable speed, to migrate to the foreground of Republican politics. You could almost lose sight of what an albatross he really is.

Conor Friedersdorf, blogging for the Atlantic, says of Mr Bruni's column that it "isn't in the political analysis business. It's in the attitude business", and he's right. Mr Bruni's thesis, that Mr Paul's rise to prominence harms the prospects of the GOP, seems to be based on the assumption that Republican politicians cast their party in a bad light when they espouse too many opinions considered "loopy" by liberal food writers. I'm not so sure about that. The shakiness of Mr Bruni's argument is evident once we consider the occasion for his column. Mr Bruni's problem is that Mr Paul has lately made himself look rather reasonable, having come out in favour of a number policies—limits on executive discretion to kill by remote control, comprehensive immigration reform, reduced sentences for non-violent drug offenders—one might expect to warm a liberal's heart. The thrust of Mr Bruni's piece is that it not only remains safe to dismiss Mr Paul as a right-wing nutbag, but that he is so nutty his "moderate" streak does nothing to remove him from the company of the "wacko birds" who are alleged to hold the GOP back.

Riding his avian metaphor into a cliff, Mr Bruni writes:

Today [Mr Paul is] singing the moderate song of immigration reform, and that dirge about drones, which had a valid bass note despite its alarmist melody, struck chords across the political spectrum.

But Paul's greatest hits include a denunciation of Medicare as socialism, a recommendation of stopping foreign aid to a few key allies, and the insistent introduction of Patriot Act amendments so loopy that one of them netted all of 10 votes from the 95 senators present while another garnered a whopping total of 4.

There's a great deal of telling confusion here. Medicare is socialism. The political problem with denouncing Medicare as anything is that it's an exceedingly popular programme, even among conservatives who think they dislike socialism. Limiting foreign aid to key allies? That's an unpopular view? As for Mr Paul's "loopy" proposed amendments to the Patriotic Act, they are, as Mr Friedersdorf explains, actually rather modest rule-of-law, civil-libertarian reforms much in the same spirit as the "dirge about drones" that Mr Bruni admits struck a chord "across the political spectrum". The political problem with Mr Paul's amendments to the Patriot Act is not that they are loopy, but that politicians who support them risk of appearing "soft on terror". If you happen to doubt that a notional "war on terror" justifies the state doing whatever it wants whenever it wants with minimal oversight from democratic or judicial bodies, then Mr Paul's "loopy" amendments may look like evidence of electorally courageous moral leadership. Anyway, one wonders how exactly Mr Paul's example is supposed to hamper his party? He's too conservative? Not conservative enough? Mr Bruni can't seem to decide.

I suspect that Mr Bruni's liberal prejudices lead to him to misunderstand what he sees as Mr Paul's "moderation". He writes:

I ... wonder if [Mr Paul's] modulating his [tone], as some long-term strategy moseys into his thinking.

Yes, his recent questioning of jail time for marijuana arrests isn’t a certain winner, but it’s not a surefire loser, either. And his immigration speech last week, which called for a path to citizenship without quite calling it that, suggested a fresh calibration and sensitivity.

If one begins from the observation that Mr Paul owes his political career to the electoral infrastructure laid by Ron Paul, his zealously libertarian father, then Mr Paul fils will appear to be groping for the sweet spot between his father's brand of libertarianism, behind which there remains a great deal of organisational energy and fund-raising heft, and ongoing electoral feasibility. That is to say, Rand Paul has not triangulated his positions on foreign policy, civil liberties or the war on drugs by starting from the GOP consensus and then tacking toward the bipartisan center. Rather, he had been moving mostly toward the Republican Party's standard line, beginning from a more thoroughly libertarian starting point. This has put Mr Paul nevertheless well to the left of mainstream Democrats on a number of issues, but also to the right of mainstream Republicans on others. Apparently this has left Mr Bruni, and no doubt many other unreflective liberals, somewhat confused.

Mr Paul's watered-down libertarian streak both reinforces and interferes with Mr Bruni's inclination to dismiss the senator as yet another "wacko bird" conservative, and Mr Bruni's column is an artefact of this dissonance. He wouldn't have written it had he not felt impelled to examine the grounds of his disdain for Mr Paul. Were Mr Bruni better supplied with what Keats called "negative capability"—the ability to abide "in uncertainties, mysteries, doubts, without any irritable reaching after fact and reason"—he might have been able to rest content with the observation that Mr Paul is, from a standard liberal's perspective, both better and worse than your typical ideological conservative. This would have put him in a position to acknowledge that it remains to be seen whether Mr Paul's laissez faire mind-crimes render his civil-libertarian virtues moot, or whether Mr Paul's rising influence within the GOP will harm or help its electoral prospects. Instead, Mr Bruni found a way to assure himself that Mr Paul's recent reasonableness need not even complicate easy partisan contempt.

What's at stake

the economistMié, 27/03/2013 - 23:18

AS THE Supreme Court considers gay marriage, our US editor discusses the issue with Patrick Egan, a professor of political science at New York University

Judge not?

the economistMié, 27/03/2013 - 15:34

AS A young woman coming to terms with her sexuality in the 1980s, Laurette Healey began to “eliminate things” from her future. Marriage, domestic stability, the chance to form a lifelong bond with a partner; these rewards would all be available to most of her friends but they would not, she came to believe, be part of her life.

Today Ms Healey and her partner, Marcia Dávalos, live in a quiet Los Angeles neighbourhood under California’s domestic-partnership law. This means the state recognises their union and grants them most of the benefits of marriage. (Seven other states have similar arrangements.) But it does not allow them to wed.

In June 2008 the Supreme Court of California overturned a gay-marriage ban, making it the second state (Massachusetts was first) to legalise such unions. Some 18,000 couples took the opportunity to get married before Proposition 8, a constitutional amendment that banned gay marriage, won the support of 52% of the state’s voters at a referendum five months later.

But the passage of Prop 8 turned out to be just another step in a complex three-way jig between politicians, judges and campaigners. Gay-rights groups successfully challenged the law, first in a San Francisco district court and then on appeal. A stay was granted, meaning Prop 8 remained in force, as the case made its way through the judicial system; on March 26th it became the first gay-marriage case to reach the Supreme Court. (A second, on the Defence of Marriage Act, which denies federal benefits to married same-sex couples, was due to be heard on March 27th.)

Many of the 80 minutes the court devoted to Prop 8 were given over to procedural discussions of “standing”—the question of whether the proponents of the amendment had the right to argue their case in court. Californian officials have declined to defend it, so it has been left to ProtectMarriage.com, a pro-Prop 8 group, to make the case. (Similarly, Barack Obama’s administration will not advocate for DOMA; congressional Republicans will do so instead.) In 2011 California’s state Supreme Court granted standing to the Prop 8 backers. But some legal eagles have urged the Supreme Court to rule otherwise, and the justices appear receptive.

Some of the crowd who queued for five days to witness the hearing must have been disappointed by the focus on process. But to judge by their hand-wringing, when the justices issue their verdict in June it will not be a surprise if they reject the case on these grounds. (That would leave the district-court ruling overturning Prop 8 in force, although further legal challenges could follow.) Anthony Kennedy, the swing vote between the court’s liberal and conservative wings, seemed “deeply conflicted,” says Matt Coles of the American Civil Liberties Union, a lobby group. At one point the judge wondered if the court had erred in agreeing to hear the case at all.

If standing is granted, the justices then have several options. Most dramatic would be a ruling that all state bans on gay marriage contravene the equal-protection clause of the 14th amendment to the constitution. This “50-state solution” is sought by the Prop 8 plaintiffs and gay-rights groups, but it did not get much of an airing before the court.

Less sweeping would be the “nine-state solution”: to overturn bans in California and the other states (including Colorado, which recently passed a civil-union law) that recognise same-sex unions but fall short of marriage. This curious argument, proposed by the White House and presented in court by Donald Verrilli, the solicitor-general, was attacked by both wings of the court. The odds against it have lengthened.

The last option is a California-only verdict. The justices could uphold the appeals court’s ruling that to grant the right to marry only to withdraw it later is unlawful. That would overturn Prop 8 without implications for other states. Or they could uphold the will of California’s voters and leave the law in place. That would disappoint thousands of couples who hope to wed (although polls suggest that Prop 8 would soon be overturned at the ballot box anyway), but would provide solace to states that wish to preserve their bans.

Religiosity strongly predicts opposition to gay marriage: 84% of weekly churchgoers voted for Prop 8. But arguments based on faith, tradition or squeamishness cannot be adduced in court. This has forced advocates into awkward corners. It is in the state’s interest, Charles Cooper, lawyer for ProtectMarriage.com, told the Supreme Court, to keep marriage heterosexual in order to regulate procreation. “Nobody thinks that’s what marriage is about,” says Michael Klarman of Harvard Law School, “but that’s the argument they must make.”

What if the court were to rule expansively? Gay-marriage opponents warn of another Roe v Wade that cuts off debate and poisons politics for decades. Their foes cite Loving v Virginia, the 1967 case that overturned bans on interracial marriage without triggering much resentment. That seems the better comparison, and not only because it concerns marriage. Nearly half of Americans oppose gay marriage but more back it, and their numbers are growing quickly (see chart). Fully 64% think gay marriage is inevitable.

It is not hard to see why: support among almost every demographic group is growing, and youngsters are the most liberal of all. Sniffing the political wind, last month many Republicans called on the justices to ditch Prop 8. Hillary Clinton has added her support. In the 2004 election cycle Republicans used gay marriage to whack Democrats; the reverse could happen in 2016.

The change in public opinion found political expression four times over last November. After a string of losses for campaigners Maine, Maryland and Washington became the first states to legalise gay marriage via the ballot box, and voters in Minnesota rejected a proposed ban. Legislatures in six other states and Washington, DC, have approved gay marriage. Several others, including Illinois and Minnesota, are debating bills; some could pass before the court’s ruling.

Both sides of the debate have found uses for this turnaround in fortunes. Six months ago defenders of “traditional marriage” were crowing about their electoral invincibility; they now say America is conducting a vigorous democratic debate that judges should allow to run its course. This argument may appeal to cautious justices.

As for gay-marriage campaigners, their successes have helped repair a split that emerged when the Prop 8 case was filed in 2009. Backers argued that marriage was a civil right that should not be held hostage to electoral whims. Others, fearing backlash from a premature court ruling, preferred a quieter approach, including state-by-state political campaigns.

The political track now looks more viable, but the growth in support that made election wins possible has also reduced fears of backlash. “The momentum on the ground makes people less concerned about whether we are before the court before we should be,” says Brian Moulton, legal director at the Human Rights Campaign, a lobby group. The cause has been helped by ever-louder support from Mr Obama, who appears to see gay marriage as the great civil-rights struggle of the era.

If so, it is being waged for couples like Ms Healey and Ms Dávalos. They plan to marry if Prop 8 is scrapped, but without fanfare. “Marriage is much more serious than a ‘yippee-for-me’ day,” says Ms Healey. The importance of marriage, she adds, is the only thing her opponents get right.

TakakaNew Zealand

Tom PetersMié, 27/03/2013 - 14:48
Tom is giving a "hometown" NZ presentation on the issue of what a job will look like (if there are... Cathy Mosca

The aggrieved party

the economistMar, 26/03/2013 - 22:37

TODAY the Supreme Court heard the first day of oral arguments in a case that could decide the future of gay marriage in America. This comes amidst an ongoing sea change in public opinion on the issue. As an increasing number of politicians come out in favour of gay marriage, polls show growing public approval for expanding access to the institution. A recent Washington Post/ABC News poll pegged support at 58% (and over 80% for those under 30).

This has put gay marriage opponents on the back foot. Some, like Austin Nimocks, argue that although the public is moving in favour of gay marriage, the decision should be left up to the states. "Let democracy work", says Mr Nimocks, who is co-counsel on the legal team defending Proposition 8 before the court today. He believes the issue of gay marriage should be "examined by all of society over the course of decades".

That, of course, is an easy argument to make by those not injured by the discriminatory policy. Ted Olson and David Boies, arguing the other side of the case, counter, "For one to say that the Supreme Court should leave the question of marriage equality to the political processes of the states is to say that states should remain free to discriminate—to impose this pain and humiliation on gay men and lesbians and their children—for as long as they wish, without justification."

As more studies disprove claims of familial instability and societal wreckage resulting from gay marriage, those who would ban it have fallen back on other arguments. The latest is the let-democracy-work one, which implies that states have a right to prohibit gays from participating in marriage, and that such discrimination does not run counter to the 14th amendment. The latter contention is rather unconvincing, so there is often a corollary: the claim that the aggrieved party in this exchange may not be gays but straight married couples.

This is often put in terms similar to those used by Andrew Ferguson, a writer for the Weekly Standard, who claims that if the state allows gays to wed, marriage "will not be the same institution that has won the unanimous endorsement of social scientists. It will be a novel and revolutionary institution owing its existence to the devaluation of an old and settled one." Old and settled? The idea that marriage has been one unitary and unchanging institution over time is ridiculous. The allowance of interracial marriage, no-fault divorce and marriage outside of the church have all changed the institution. But mostly I just pity Mr Ferguson's wife if he really feels that his relationship will be devalued should gays be allowed to wed.

It seems odd in an age when divorce, cohabitation and alternative family structures are so common, that the desire of gay people to actually take the binding vows of marriage would be considered a threat. If anything, the desire of gays to participate strikes me as a boon for this declining institution. Those who call gay marriage a "radical social experiment" must ask themselves what is so radical about bringing an existing homosexual relationship (the seemingly radical part, which isn't going away) into this traditional social structure. Megan McArdle has it right when she says that gay marriage would be "a landmark victory for the forces of staid, bourgeois sexual morality."

There is an odd bit of circular reasoning that tends to afflict the arguments of gay-marriage opponents. It goes something like this: because I oppose gay marriage, the institution of marriage as I see it will be irreparably harmed by the inclusion of gays, therefore continued discrimination is necessary in order to not offend my own discriminatory views. Seeing as there is little reason to think gay marriage will have any palpable effect on straight marriages, this is a problem opponents of gay marriage must work out in their own minds—it is not a good basis for law, nor is it an excuse for timid judicial decision-making.

That brings me back to today's hearing, from which observers came away thinking the court would produce a limited opinion (but who knows really). It would be a shame if this resulted from a feeling amongst the justices that it is too soon for gay marriage, that the court must wait for more of the public to grow out of their unreasonable fears. That would be to misidentify the aggrieved party in this case. There is only one—gays who want to marry—and for this reason the court can discount the potential of a Roe v Wade backlash to a broader decision. Some curmudgeons may never come to accept gay marriage, but they will soon realise that their own marriages are no more affected by the practice than by their own bigotry. For all but the hardcore opponents, there is simply no reason for this to become a long-term fight.

(Photo credit: AFP)

The moat is part of the castle

the economistMar, 26/03/2013 - 16:38

WHAT do the Supreme Court and Cesar Millan have in common? They both love dogs. Mr Millan, the famed "Dog Whisperer", trains them; the court has given the police wide latitude to use them. In 1983 the Court held that police do not need probable cause to seize luggage from a suspect at an airport, and that subjecting that luggage to a "sniff test" by a drug-detecting dog does not constitute a search under fourth-amendment terms (the fourth amendment protects against "unreasonable searches and seizures", and requires that "no warrants shall issue but on probable cause"; it has had a rough decade). In 2005 it held that a sniff-test conducted during a traffic stop similarly fails to violate the fourth amendment. Police and prosecutors have tended to argue that sniff tests are not fourth-amendment searches because, as Lyle Denniston explains, the only thing the sniff-test does is alert a law enforcement officer to the presence of an illegal substance, and where illegal substances are concerned no privacy right attaches.

A case brought by Joelis Jardines gave the court the chance to widen even further the scope of what sniffer dogs may do. Mr Jardines lives (or at the very least lived, when the initial case was brought) in Miami; police got a tip that marijuana was being grown inside his house. After setting up outside his house for 15 minutes, a member of the police surveillance team brought Franky, a drug-sniffing Labrador, onto the front porch. The dog smelled something, and on that basis the police applied for and received a search warrant. When it was executed Mr Jardines tried to flee; he was arrested and charged with marijuana trafficking. He moved to have the conviction overturned on the grounds that Franky's actions constituted an illegal search. The trial court granted that motion; an appellate court reversed that decision; Florida's supreme court reversed the appellate court's decision, and so the parties wound up pleading their cases before the Supreme Court last October.

If Florida's attorney entered that morning with a degree of optimism based on the broad latitude the court had previously granted to drug-sniffing dogs, it probably dissipated quickly. Justices Sotomayor, Kennedy and Scalia—the left, the swing and the right—swiftly lit into him. Justice Kennedy called his claim that "no one has a legitimate expectation of privacy" regarding contraband "circular", because at stake in the case is not the contraband itself but the method the police use to find it. Justice Sotomayor implied that his argument effectively invalidates the entire basis for search warrants. And Justice Scalia, who concurred that dogs can sniff cars during a traffic stop, argued that this was a very different matter: in this case the police went right up to the "curtilage" of the house, "and used a means of discerning what was in the house...that should not have been available." This echoes one of his previous opinions, in which he held that aiming a thermal-imaging device at a private home to determine whether marijuana was being grown does in fact constitute a fourth-amendment search.

And in this case he reached much the same conclusion. "The home", Justice Scalia wrote in the Court's opinion, "is first among equals", and for fourth-amendment purposes the curtilage is part of the home. The police need not divert their gaze from private homes as they walk down the street, and they can even knock on the front door and ask questions, just as anyone else might do. But they cannot bring drug-sniffing dogs onto the porch without invitation or a warrant. This distinction, Justice Scalia notes, "does not require fine-grained legal knowledge; it is generally managed without incident by the Nation's Girl Scouts and trick-or-treaters." Justice Kagan wrote a similarly plain-spoken concurrence. The police bringing a drug-sniffing dog onto the porch uninvited and unwarranted is as much a trespass as a stranger walking up to your front door, not knocking or saying hello, and peering through your window with high-powered binoculars. Justices Alito, Roberts, Kennedy and Breyer dissented, arguing that the majority's definition of trespass is unsupported in precedent, and that "odors emanating from a house may be detected from locations that are open to the public". That the member of the public detecting those odors happened to be a dog rather than a human was neither here nor there.

Civil-libertarians will rightly celebrate this decision, but it deserves only two cheers. It pertains strictly to physical property, and to domestic physical property (ie, the home), which as Justice Scalia noted already enjoys strong fourth-amendment protection. The third cheer will come when the Court extends similarly robust protection to data and metadata. That, alas, still seems a long way off.

A hard Roe to hoe

the economistVie, 22/03/2013 - 17:37

TO WHAT extent does the debate over same-sex marriage resemble the debate over abortion? Both involve thorny, intersecting questions of religious freedom, personal liberty and sex. Both involve conflicting narratives and costs. The division between the two sides is wide, and like many debates fuelled by religious fervour; at times it risks becoming absolute. But not always: witness the conversion of Rob Portman, a conservative senator from Ohio, from gay-marriage opponent to supporter thanks to the coming-out of his son. Mr Portman came to realise that gay marriage represents not "a threat but a tribute to marriage, and a potential source of renewed strength for the institution." Indeed. But he also warns that change evolves slowly, and that it "should come about through democratic processes in the states. Judicial intervention from Washington would circumvent that process as it's moving in the direction of recognising marriage for same-sex couples. An expansive ruling would run the risk of deepening divisions rather than resolving them."

That, of course, is a veiled reference to the Warren Court's decision in Roe v Wade in 1973. That ruling rather tendentiously found that women had a constitutional right to a first-trimester abortion. At the time, abortion-rights advocates celebrated, believing it would settle the long, divisive debate over abortion. As we know, it has not. Even Ruth Bader Ginsburg, a liberal Supreme Court justice and staunch advocate for women's rights, criticised the decision for "step[ping] boldly in front of the political process." Roe short-circuited a growing state-level trend toward liberalisation of abortion laws. It galvanised, perhaps even created, the pro-life movement. And as Ms Ginsburg says, "it seemed entirely to remove the ball from the legislators' court." Sometimes, she contends, this is necessary; in the 1950s southern states showed no movement toward ending segregation, which was plainly unconstitutional, and so the courts had to step in. But Mr Portman and Ms Ginsburg seem to agree that social change is best enacted through legislatures rather than courts.

Josh Barro takes a different view. He thinks that a strong Supreme Court decision in favour of same-sex marriage would save Republicans from a long, embarrassing and ultimately losing fight while also giving "Republican politicians a useful scapegoat to impotently shake their fists at." Today 30 states constitutionally ban same-sex marriage. A Supreme Court decision in favour of same-sex marriage would render those archaic and moot, like state bans on interracial marriage (which South Carolina and Alabama finally got around to removing in 1998 and 2000: 31 and 33 years after the Supreme Court invalidated them in Loving v Virginia). Mr Barro also points out that most civil-rights decisions (Brown, Lawrence) weaken rather than entrench social division.

So who is right: Mr Barro or Justice Ginsburg. Well, take a look at the arguments made by the same-sex marriage opponents profiled on Wednesday by Ashley Parker. They take Roe as an inspiration, an example of how one side can lose a decisive battle yet fight on in a long war. Caitlin Seery says, "When you de-link marriage from childbearing, you then have to increase the complexity of that relationship." I assume, then, that Ms Seery opposes not just same-sex marriage, but also marriages among heterosexuals past child-bearing age, and indeed heterosexual marriages that do not produce children. I eagerly await her proposed constitutional amendment requiring married couples to procreate. Ryan Anderson, a Heritage Fellow, makes a similar argument based on reproduction, which is fine, but why then does it not apply to non-procreative heterosexuals? He also frets that same-sex marriage "exclude[s] sexual complementarity"—the old argumentum ad genitalium, that gays' equipment doesn't fit right. Not to dwell too long on the bedroom, but I presume committed gay couples have found a way to be sexually complementary (and probably sexually complimentary too!). This argument requires opposing sodomy for heterosexuals too, which Mr Anderson does not do. Apparently non procreative sex is only wrong when gays do it.

Finally, Joseph Backholm complains of same-sex supporters "fram[ing] this as a vote for gay people to be happy." Well, yes. It is a vote for gay people to have the same defining, challenging, fulfilling, frustrating, enriching, beautiful and complete marital relationships that the rest of us have. And that is a fundamental difference between same-sex marriage and abortion. Everybody loves a wedding; nobody likes an abortion. Supporters of abortion rights simply believe that safe, legal and rare is better than unsafe, illegal and rare. The better analogy for same-sex marriage is, of course, interracial marriage. Some people still don't like it. Fine. They can marry within their own race and grumble impotently at the TV. But what they can't do is tell anyone else who to love and who to marry. Same-sex marriage supporters frame the case as a vote for gay people to be happy because that is precisely what it is.

(Photo credit: AFP)

Singled out

the economistJue, 21/03/2013 - 18:23

TOM COBURN, the junior senator from Oklahoma, doesn’t like the idea of paying for political-science research with federal cash. Last week Mr Coburn introduced an amendment to the continuing resolution that would've blocked the National Science Foundation (NSF) from funding such research. He even sent a letter to the NSF exhorting it to reconsider its "political science" grants. He used the scare quotes, presumably to indicate that he doubts political science is a real discipline. He'd rather see most of the around $10m that would have gone to political scientists be sent instead to the National Cancer Institute.

The government shouldn’t waste tax dollars on anything that isn’t worthwhile, but $10m is a trivial amount of money by the standards of the federal budget. It isn’t even much compared to the $5 billion already budgeted for the National Cancer Institute. It is, however, an enormous portion of the funding for political-science research in America. The NSF estimates that its cash pays for 61% of basic research in the social sciences.

The cuts recommended by Mr Coburn would therefore be devastating to the field of political science. Not surprisingly, political scientists are up in arms. Mr Coburn has argued that their research won’t save lives or improve the country’s competitiveness, to which the American Political Science Association has responded:

Political science research addresses questions that are fundamental to our national interest. Political science is the only discipline devoted to learning how to make democracies work better. Political science scholarship is critical to advancing national security, indeed the NSF political science program was invited by the Department of Defense to conduct scholarship deemed essential to understanding terrorism and global threats. Political science research furthers our understanding of how to develop public policies that effectively and efficiently respond to natural disasters, health care delivery, global human rights, and the other challenges we face.

That seems like pretty good value for $10m. Mr Coburn's measure has been modified to allow exceptions for research that the NSF director certifies would promote "the national security or economic interests of the United States." That makes it more reasonable. But it would still force political-science research to clear a bar that no other type of research must.

Mr Coburn argues that universities should fund the research out of their own pockets. When Jeff Flake, a Senator from Arizona, tried to cut off funding last year, he pointed out that most NSF grants in political science went to universities with endowments of $1 billion or more. But if you think of federal funding as the government buying useful research, as opposed to using research grants as academic welfare, endowment size is incidental. Most of the biggest grants in just about every field go to institutions with large endowments for the simple reason that they are best equipped to carry out research. Money spent at Harvard, with its multi-billion-dollar endowment, is money well spent if it produces studies valued by the government.

The real debate seems to be over what is of value. For many Republicans the answer is nothing having to do with political science. Yet it is hard to see how that discipline is any more frivolous than—or even all that different from—economics, sociology or anthropology. Mr Coburn's measure wouldn’t touch NSF funding for other social sciences. But this is the fourth time since 2006 a Republican has singled out political science for cuts.

If we look closer at those efforts, the picture becomes a bit clearer. Mr Coburn, for example, has particularly objected to studies on American attitudes to the filibuster, at a time when Republicans are using the filibuster routinely. Mr Flake had likewise complained about research on climate-change negotiations. When Mr Coburn first proposed cutting off funding in 2009, he complained that NSF money had gone to fund The Human Rights Data Project, which, he noted, had “concluded that the United States has been ‘increasingly willing to torture enemy combatants and imprison suspected terrorists,’ leading to a worldwide increase in ‘human rights violations’ as others followed-suit.” Mr Coburn even groused that Paul Krugman had received NSF grants more than 15 years earlier. Presumably that was because Mr Krugman went on to become a liberal columnist and not because the research won him a Nobel prize.

In all of these cases, the research risked calling into question the wisdom of policies supported by the Republican Party. In none of the cases did Republicans argue that the studies were flawed. They appeared to simply object to financing research that might contradict their point of view.

That’s short-sighted. Research into the effectiveness of American policies can only improve them. Going after researchers is a way of shooting the messenger. Of course, not every project that the NSF funds is going to be worthwhile (Mr Coburn has cited a few that do seem wacky). But that’s true of every field of study. The NSF’s peer-review process is quite rigorous. Some 80% of all grant proposals in political science are declined. The ones that get through are actually quite valuable, as Mr Coburn himself has discovered.

Tea-party games

the economistMié, 20/03/2013 - 15:48

BY THE end of “The Hunger Games”, a highly successful trilogy of dystopian novels for teenagers, the main character—a country girl in a post-apocalyptic America—has survived a state-run reality TV show in which children must hunt and kill each other, and joined a rebellion against the decadent autocrats of the “Capitol”, an elite enclave that treats the rest of the country as a collection of colonies. On finishing the final volume, Amanda Robbins, a pillar of the Florida Federation of Teenage Republicans, fired up her computer and excitedly asked: “Is this author a conservative?” A “ton” of pages were debating this very question, Miss Robbins found.

In truth Suzanne Collins, the author of “The Hunger Games”, has never declared her politics, calling her trilogy a “gladiator story” exploring the power of television, inequality and war. Competing online essays have proclaimed her blockbusters a Christian allegory, an attack on capitalism worthy of Occupy Wall Street and now a rallying cry for the anti-government conservatives of the tea-party movement.

As part of wider efforts to recruit younger members (and challenge popular images of the tea party as a home for grey-haired curmudgeons), such groups as the Tea Party Patriots are explicitly laying claim to the books (the first has also been made into a film), calling the trilogy a commentary on Barack Obama’s America.

The Tea Party Patriots held a Hunger Games-themed youth event on March 15th at the Conservative Political Action Conference (CPAC), an annual shindig for conservative activists and Republican leaders who wish to woo them. The group also launched a lavishly-produced film trailer (see above) drawn from the trilogy’s dystopian themes. Entitled “A Movement on Fire”, it depicts a future America in which young rebels battle the “Development Party”, a statist claque trying to smother individual will with the help of government welfare, a slavish media and death squads. It has gone viral on the conservative internet.

In case the point is missed, the group’s co-founder, Jenny Beth Martin, used a speech to declare Washington, DC, “very much like” the decadent “Capitol” of the Hunger Games, thanks to corrupt, cronyish links to lobbyists and Wall Street. Even the children slain in its gladiatorial contests have their real-life equivalent in patients who faced shorter lives thanks to Mr Obama’s health reforms, she says. In an interview Ms Martin calls the third book a particular favourite, its double betrayals by both a luxury-addled despot and a supposed rebel leader bringing to mind the unprincipled profligacy of both the Bush and Obama eras.

Pressing the restart button

the economistMié, 20/03/2013 - 12:00

AS BARACK OBAMA arrives in Israel for his first visit to the country since becoming president, our correspondents assess whether he can keep a two-state solution alive

How much can the president do?

the economistMar, 19/03/2013 - 21:11

ON THE eve of Barack Obama’s first trip to Israel as president, commentators are lobbing a lot of unsolicited advice his way. At the Washington Post, Jennifer Rubin recommends channeling George W. Bush, who affirmed the Jews’ biblical tie to the land and avoided all criticism of Israeli settlements in his 2008 speech to the Knesset. In a New York Times op-ed, from the opposite perspective, Rashid Khalidi insists that Mr Obama “must forthrightly oppose the occupation and the settlements and support an inalienable Palestinian right to freedom, equality and statehood.”

The president is unlikely to tack in either direction. If his previous statements are any guide, he will steer a middle path: affirming the unshakable bond between America and Israel, affirming the rights of Israelis and Palestinians to live in peace and security, pressuring both sides to recognise the rights and interests of the other, and gamely encouraging the parties to return to the table for peace talks.

But such platitudes are unlikely to bear much fruit, as my colleague pointed out a few weeks ago, and all the advice is merely a projection of different perspectives on the conflict. Mr Khalidi came close to admitting the limited role the American president can expect to play when he wrote that “peace has to be made between Palestinians and Israelis, not between Mr Obama and his critics”, but he still framed the question as “what should Barack Obama...do about the Israeli-Palestinian conflict?”

As we explained in last week's paper, one thing Mr Obama can do is tell both sides that two states is the only solution. But the administration is dampening already low expectations. The president has said that his primary goal on his tour of Ramallah, Tel Aviv and Jerusalem is simply “to listen”. An adviser has stated that the president will focus on "the broader role of public opinion in peacemaking". As the the Los Angeles Times reports, Mr Obama has some work to do making friends with the Israeli public:

A poll published Friday in the Maariv newspaper found that 38% of Israelis defined Obama's attitude toward their country as "hostile" compared with 33% who found it "favorable." More worrisome for Obama, only 10% of respondents said their opinion of the president was favorable, while the rest said their view was indifferent, unfavorable or even "hateful." Other surveys have found more positive views, but Obama clearly does not enjoy the sort of demonstratively warm relationship with the Israeli public that his two predecessors had.

But charming average Israelis is at best a first, small step toward helping the two sides settle their differences. Even popular American presidents have had a very hard time brokering deals between Israelis and Palestinians. Just ask Bill Clinton, beloved by Israelis, who visited the region four times during his presidency, choreographed the historic handshake between Yitzhak Rabin and Yasser Arafat at the White House in 1993 and invested heart and soul into 14 days of Camp David talks in 2000. In his memoir, Mr Clinton summarised the final status agreement that wasn’t:

I said these parameters were nonnegotiable and were the best I could do, and I wanted the parties to negotiate a final status agreement within them. After I left, Dennis Ross and other members of our team stayed behind to clarify any misunderstanding, but they refused to hear complaints. I knew the plan was tough for both parties, but it was time – past time – to put up or shut up. The Palestinians would give up the absolute right of return; they had always known they would have to, but they never wanted to admit it. The Israelis would give up East Jerusalem and parts of the Old City, but their religious and cultural sites would be preserved; it had been evident for some time that for peace to come, they would have to do that. The Israelis would also give up a little more of the West Bank and probably a larger land swap than Barak’s last best offer, but they would keep enough to hold at least 80 percent of the settlers. And they would get a formal end to the conflict. It was a hard deal, but if they wanted peace, I thought it was fair to both sides.

The big picture hasn’t changed much since 2000: the sticking points remain Jerusalem, land swaps and the Palestinian right of return. But some details make an agreement today even less likely. Binyamin Netanyahu and Mahmoud Abbas are constrained ideologically and practically in ways Mr Rabin and Mr Arafat were not: Bibi is no peacemaker, and the division of Palestinian leadership between Mr Abbas’s Fatah in the West Bank and the militant Hamas in Gaza makes it much harder for Mr Abbas to act. The number of Jewish settlers has more than doubled, multiplying facts on the ground and complicating any agreement on territory. Instability in Egypt, turmoil in Syria and the hostility of Iran pose immediate and near-term threats which overshadow the long-simmering, existential conundrum of the Palestinian question.

(Photo credit: AFP)

Anniversary of a mass delusion

the economistLun, 18/03/2013 - 17:41

TEN years ago yesterday, George W. Bush warned Saddam Hussein that he had 48 hours to step down from power and leave Iraq, along with his sons, or face a US invasion. It's all gone a little hazy now; why exactly did this seem so urgent at the time, again?

The danger is clear: using chemical, biological or, one day, nuclear weapons, obtained with the help of Iraq, the terrorists could fulfill their stated ambitions and kill thousands or hundreds of thousands of innocent people in our country, or any other.

...Terrorists and terror states do not reveal these threats with fair notice, in formal declarations—and responding to such enemies only after they have struck first is not self-defense, it is suicide. The security of the world requires disarming Saddam Hussein now.

This, obviously, was all a fever dream. There were no biological or nuclear weapons; there may have been a few rusty chemical shells lying around, just as there had been for decades. Iraq was not an important sponsor of Islamicist terrorism. Islamicist terrorism was fueled not by fascist dictatorships such as Iraq, but by non-state actors in failed states such as Afghanistan and Somalia; and our invasion of Iraq promptly turned it into precisely the sort of failed-state sectarian war zone that does fuel terrorism. Thousands of American soldiers died in a war in Iraq that only exacerbated the danger of anti-American terrorism. Thousands of Iraqi soldiers died as well, and hundreds of thousands of Iraqi civilians died in the resulting civil war, most killed by the Iraqi militias who emerged in the power vacuum the US invasion created, but many killed by US armed forces themselves. In the name of pre-empting a non-existent threat, America killed tens of thousands of people and turned Iraq into a breeding ground for terrorism. And we spent a trillion dollars to do it.

How did America's policymaking community ever commit itself to such a catastrophic delusion? I don't truly understand it now, and I didn't understand it then. I found the developing consensus for an unprovoked attack on Iraq in late 2002 absurd. But I had an advantage: I wasn't living in America at the time. Viewed from the defamiliarising distance of West Africa, the American polity's effort to talk itself into invading a country that hadn't attacked it was baffling and disturbing. That reaction was widely shared in the country where I was living among locals and expats, Americans included.

Inside America, the atmosphere was entirely different, as I found after returning from Africa in early 2003. Large numbers of otherwise intelligent people had ended up supporting the war. Why? I think it had something to do with the iterative process of these sorts of discussions. You start out asking how to make sure Iraq doesn't have biological weapons, then you're asking how to respond to Iraq's refusal to comply with UN inspections, and before long through a series of individually rational steps you've arrived at a position that turns out to be a mistake. But the malign influence of intellectual conformity, the fear of being branded anti-patriotic or a foolish apologist for dictators, the nervous self-hatred of an intellectual class cowed into submission by an anti-intellectual president's popularity also all played a role. I remember spending a week in the offices of the New York Times's Outlook section in January; the anxiety to self-police against anything that could be perceived as liberal bias was palpable. Smart, serious people convinced themselves to accept the most spurious claims.

What I took away from it all was the depressing conviction that all of us, including those of us considered the most responsible, well-trained and serious, are entirely capable of talking ourselves into lurid fantasies; that the actions we believe constitute difficult but necessary choices may in fact be the gestures of sleepwalkers battling phantoms. This is a lesson we learn and forget over and over again. Two days after Mr Bush's warning speech, I headed off to a new foreign posting, and watched the tanks roll into Iraq on a TV in the passenger lounge of a South-East Asian airport; a few hours after that, I was arriving in Vietnam. So was the rest of America, but it didn't know it yet.

(Photo credit: AFP)

Cheer up

the economistJue, 14/03/2013 - 22:12

POLITICAL gridlock may be bad for America's economic prospects, says Edward McBride, but the underlying picture is much brighter than it seems

The danger of profligacy

the economistJue, 14/03/2013 - 18:53

WHAT does Paul Ryan think will happen if America fails to set its fiscal house in order? This:

Unless we change course, we will have a debt crisis. Pressed for cash, the government will take the easy way out: It will crank up the printing presses. The final stage of this intergenerational theft will be the debasement of our currency. Government will cheat us of our just rewards. Our finances will collapse. The economy will stall. The safety net will unravel. And the most vulnerable will suffer.

Is hyperinflation really what's in store if America keeps living beyond its means? Neil Irwin of the Washington Post doubts it. First of all, he argues, the costs of Medicare and Social Security, the insatiable monsters of the budget, are either subject to inflation or indexed to it, and thus inflation wouldn't really help. For this reason, Mr Irwin writes, "inflation wouldn’t offer Congress much of a way out of its deficit problems; indeed, it could make them significantly worse." So there would be little temptation to inflate.

I confess to not fully grasping the logic of this, though it is certainly interesting to glimpse Mr Irwin's assumptions about what would and would not remain fixed should the Fed set the presses to warp. The value of the currency evaporates, but statutory inflation adjustments remain!

I suspect part of the problem here is that Mr Irwin imagines that Mr Ryan is imagining relatively high but manageable 1970s-style inflation—8%, say—while I, having spent most of my professional life around Ayn Rand-loving deficit hawks like Mr Ryan, imagine that Mr Ryan really is imagining a full-on Zimbabwean monetary calamity, as fantastic as that may seem. He really thinks the stakes are really high, not just that moderate inflation may nibble unjustly at the nuts we've stashed for our golden years. 

The full story in the event of a hyperinflationary catastrophe is far too complex to predict, but it's fun to think about how it might go. Here's my very rudimentary sense of things. Why would America, if "pressed for cash", as Mr Ryan puts it, start financing its spending through rapid inflation? Probably because the cost of issuing new debt (currently a relatively cheap option) had become too dear. But then the Treasury's credit rating would tank even further, and the cost of borrowing would become really prohibitive, forcing the government to finance new spending mainly through new revenue. But runaway inflation would quickly kill the real value of any taxes collected, no matter how high rates are jacked up. So, assuming Americans won't contemplate anything like selling the Grand Canyon to a consortium of sheiks (in euros, or gold-pressed latinum), it would become simply impossible to finance Social Security and Medicare at current real levels. There is, sorry to say, no legal entitlement to social-insurance transfers, so the government would violate no law by backing out of its promises. Should the hallowed institutions of the American state somehow manage to survive a hyperinflationary cataclysm, presumably Congress would simply scrap the inflation-indexing of Social Security, and/or continue to mail cheques that America's seniors and health-care providers will find good mainly for kindling, or a laugh. That's how the safety net unravels. There's no way to continue to pay for it, so it stops being paid for, and so it goes away.

Mr Irwin, imagining a rather less grisly scenario, suggests that "any politician who tried to freeze Social Security (particularly at a time of high inflation) would surely find gray-haired armies of angry seniors in their office making their dissatisfaction known". I'd be more worried about armies of armed Army personnel making their dissatisfaction known. 

Mr Irwin goes on to argue that, in any case, we can trust the Federal Reserve to not get carried away. Not to say that it hasn't. Mr Irwin acknowledges that it has happened "as recently as the 1970s, when Fed chair Arthur Burns allowed inflation to get out of control in no small part due to political pressure from the Nixon administration." Furthermore, "An acquiescent central bank is crucial to understanding the inflation episodes ... in Germany, Zimbabwe, and Italy".

But that won't happen here, now! Why not? Because "a lot has changed since Arthur Burns’s time, and the idea that a central bank has not just the power, but the responsibility to prevent inflation from getting out of control is deep-seated within the Fed and other central banks." That's it?

Either Arthur Burns was a pushover or he didn't know better or both. Suppose we really do know better now. Why assume we won't get another pushover? Actually, let's take it easy on poor Arthur Burns. The central variable isn't really the resolve of the central banker, but the nature of the "political pressure" applied. Suppose the children of members of the FOMC begin to disappear and the president says he has no idea what's going on but can imagine circumstances under which he might feel inclined to look into it?

My point isn't that Paul Ryan is on to something, and that failure to travel "The Path to Prosperity" will really have us pushing wheelbarrows of cash to the Piggly Wiggly. My point is that the system really is fragile, and really does depend on a handful of people in critical positions of power doing the right thing, even when it hurts. I don't happen to think we're in imminent danger of the sort of systemic failure of continence I imagine Mr Ryan imagines. I'm naive enough to suppose that portents of such a dire future would be already visible in interest rates and measures of inflation expectations, and they aren't. But I do think that there's something to be said for the idea that value of a government guarantee—of access to health care, or retirement security, or whatever—is only as good as the culture within which the government operates. If America's political culture turns out to be such that we are at last unwilling or unable to rein in deficit spending and shrink the debt, then we ought not be too confident that in a pinch our politicians and technocrats will be willing or able to nobly man their posts.

Enabled

Your money, your life

the economistJue, 14/03/2013 - 15:05

REMEMBER Occupy Wall Street? Today, 18 months after the protest movement sprang to life in New York City and became a national phenomenon, it seems almost a will-o’-the-wisp. But as Zuccotti Park has returned to its pre-drum circle serenity, one of the main objectives of the Occupy movement has been chugging along: the mission to draw attention to the inequalities at play in American democracy.

Income inequality in America is at levels not seen since the 1920s, and the story is getting a lot of air time. One nifty video, which has gone as viral as a wonkish research report could ever go, suggests that 40% of the nation’s wealth is controlled by the Occupy-derided "one percent”, while the bottom 40% of Americans hold only 1% of the wealth. The video, produced by the unassuming, graphics-gifted Politizane, has attracted over 4m viewers and helps to correct Americans’ misperceptions about the extent of inequality in their polity. Meanwhile, Joseph Stiglitz has thrown the weight of his Nobel prize in economics behind a book on the subject—"The Price of Inequality: How Today's Divided Society Endangers Our Future"—and penned a New York Times op-ed calling equality of opportunity a “national myth”.

Adding injury to insult, new research reported in the Washington Post finds a link between America's wealth inequality and the life-expectancy gap. Focusing on men and women in two counties in Florida, the data show that being on the wrong side of the wealth gap can, quite literally, kill you.

[St. John’s] county’s plentiful and well-tended golf courses teem with youthful-looking retirees. The same is true on the county’s 41 miles of Atlantic Ocean beaches, abundant tennis courts and extensive network of biking and hiking trails.The healthy lifestyles pay off. Women here can expect to live to be nearly 83, four years longer than they did just two decades earlier, according to research at the University of Washington. Male life expectancy is more than 78 years, six years longer than two decades ago.

But in neighboring Putnam County, life is neither as idyllic nor as long. Incomes and housing values are about half what they are in St. Johns. And life expectancy in Putnam has barely budged since 1989, rising less than a year for women to just over 78. Meanwhile, it has crept up by a year and a half for men, who can expect to live to be just over 71, seven years less than the men living a few miles away in St. Johns.

On one hand, none of this is surprising: more money translates into better health care, more leisure, more exercise and less unhealthy fast food. It is not a shock that individuals in the wealthier county would live longer lives, on average. But the research is notable for three reasons. First, the numbers aren’t trivial. We’re talking about a 5-10% boost in life expectancy for wealthy seniors. Second, it is not just a Florida phenomenon: “Even as the nation’s life expectancy has marched steadily upward, reaching 78.5 years in 2009, a growing body of research shows that those gains are going mostly to those at the upper end of the income ladder”. Third, the longer lives for the rich, like a snarled subway train, cause further inequalities up and down the line. Specifically, longer life expectancies for the rich complicate the drive to raise the retirement age and threaten to turn Social Security taxes into a regressive source of revenue. Here is why:

“People who are shorter-lived tend to make less, which means that if you raise the retirement age, low-income populations would be subsidising the lives of higher-income people,” said Maya Rockeymoore, president and chief executive of Global Policy Solutions, a public policy consultancy. “Whenever I hear a policymaker say people are living longer as a justification for raising the retirement age, I immediately think they don’t understand the research or, worse, they are willfully ignoring what the data say.”

Take a minute to process this. As a bipartisan proposal to bring entitlement spending under control, raising the retirement age to 67 or 70 will enlist the working poor to pay into the system for a few more years, curtailing their retirement years to the single digits, while the taxes they pay will flow into Social Security checks for the wealthier and healthier. A senior with a fatter bank account wins twice—with greater longevity and more years drawing Social Security checks—while the poor work longer, live fewer years and collect less in benefits.

One need not be a radical egalitarian to find this picture morally troubling. To draw upon Princeton political theorist Michael Walzer’s view of “complex equality” developed in his 1983 book "Spheres of Justice", the proposal seems wrong because it allows an inequality in one social good (wealth) to “invade the sphere” of another social good (the health and length of one’s life), and to feed back into and exacerbate wealth inequality. Mr Walzer's formula holds that “no social good x should be distributed to men and women who possess some other good y merely because they possess y and without regard to the meaning of x”. Wealth can justly enable people to buy “yachts and hi-fi sets and rugs”, he writes, and the “unequal distribution” of these goods “doesn’t matter”, but money should not be permitted to buy political power or the power to dominate others. Nor should great wealth translate into the power to lord longer life expectancies over the poor and to shift more of the burden of work and taxation onto their shoulders.

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