Category: Public Policy

Guns v. Country

It’s tough to surpass The Onion with their synopsis of conservatives’ gun policy: “‘No Way To Prevent This,’ Says Only Nation Where This Regularly Happens.” The New York Daily News had their own snappy headline: “God Isn’t Fixing This” – as they mocked four conservatives for their usual empty platitudes in the wake of yet another mass shooting. The New York Times issued its first front-page editorial in nearly 100 years, calling for a ban on high-powered weapons, and lamenting the disgrace of conservative gun policies.

Following San Bernardino, conservatives werent content to offer their customary palliative – prayer, and a call for even more guns. As a special bonus, they defeated a law that would have made it illegal for people on terror watch lists, the mentally ill and convicted felons to buy guns. The stupid never ends.

There’s an unfortunate resemblance between conservatives’ approach to this issue, and their approach to universal health care. The US ranks near the bottom of the developed world in every health measure: infant mortality, child mortality, adult mortality and life expectancy. And Americans pay more than double the OECD average in per capita healthcare expenses. The thing sets the US apart from those other countries is that it does not have universal, government-paid health insurance. The US has spent decades trying to reinvent the wheel, though the cure for poor health and high healthcare costs has been well-known for ages, with success stories the world over.

It’s the same with gun control. The solution has been effected in every other developed western country, with excellent results: make all guns harder to obtain; and ban the most dangerous guns altogether. Instead the US has done nothing – and to go with the easiest access to guns in the western world, the US not coincidentally has by far the highest rate of gun violence. The murder-by-gun rate in the US is at least eight times higher than it is in every country in Western Europe. It’s 60 times higher than the UK rate.

America’s gun troubles extend to every corner of the country. 49 US states have higher gun-murder rates than every country in Western Europe. (The rate in Vermont is a bit lower than that of Portugal.) At the high end, Missouri’s gun-murder rate is 25 times higher than the typical Western European country. Louisiana’s rate is nearly 40 times higher.

Moving beyond comparisons with Western Europe: the US gun-murder rate is 50% higher than that of Argentina; triple that of Chile; 3.5 times that of Israel; six times that of Greece; seven times that of Canada; twelve times that of India; 35 times that of Australia; and 175 times that of Poland.

In response to a 1996 mass-shooting, Australia passed strict gun control legislation – and hasnt had a single mass shooting since. Australia’s gun murder rate has dropped by 60%; it’s violent crime rate has dropped by more than 20%; and studies show that the price of guns on the black market has gotten so steep, that criminals lack the means to purchase them.

Meanwhile, the US has had more than 350 mass shootings in 2015 alone, and is on track for 30,000 dead from guns by year’s end – making for a very typical year. We neednt wonder what a solution might look like, or whether it might succeed. The cure for the national scourge of gun violence is gun control – same as it’s been everywhere, the world over.

 

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Editor’s note: The Field Guide is off for winter break – we’ll see you in the New Year.

 

Refs:

http://www.nytimes.com/2015/12/05/opinion/end-the-gun-epidemic-in-america.html

http://www.theonion.com/article/no-way-to-prevent-this-says-only-nation-where-this-36131

http://money.cnn.com/2015/12/13/media/new-york-daily-news-guns/

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/11/AR2010061103259.html

https://en.wikipedia.org/wiki/List_of_countries_by_firearm-related_death_rate

https://en.wikipedia.org/wiki/Gun_violence_in_the_United_States_by_state

Nice paper showing how gun prices make it harder for criminals to obtain guns, when stricter gun control is adopted: http://home.uchicago.edu/~ludwigj/papers/EJ_gun_markets_2007.pdf

Stupidity from the usual suspects:

Success stories abroad:

The US body count:

We at the Field Guide offered our own market-based solution: require that gun owners buy insurance to cover any harm their gun may do – including harm done after it’s stolen. Then sit back and watch as the insurance market prices guns into oblivion. Sorry for trying to reinvent the wheel – we just like listening to conservatives argue against free markets. https://liberalfieldguide.org/2014/01/31/gun-economics/

 

 

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Guns, Bees, Terrorists and the Flu

About 3000 died in the 9/11 attacks. In the flu season that followed, about 30,000 Americans died – which made for a very typical flu season. And in the 14 years since 9/11, very few Americans have been harmed by domestic terrorism – while the flu has killed about 500,000.

Even in the worst of cases, the threat to life posed by terrorism is one or two orders of magnitude smaller than the threat posed by the flu. In its effort to fight terrorism, the US has invaded two (or three) countries, spent trillions, and killed far more people in the process than terrorism ever has. Meanwhile, unfailingly, the flu kills ten times 9/11 every season – with no speeches, no outrage, and no troops sent to foreign shores.

Watching the local news, there’s never a shortage of stuff to be freaked out about. Aspiring to be freaked-out rationally, Americans should be scared by the flu. By comparison, terrorism never amounts to very much, and the cure has proved to be far worse than the disease.

Unfortunately, we cant apply the same approach to diminish the threat posed by gun-violence. That’s because, unlike terrorism, guns actually kill a huge number of Americans – about 30,000 per year, very similar to the flu. About 1.25% of all US deaths each year are attributable to guns and the flu respectively. Terrorism: not so scary. Guns and the flu: scary.

So as we construct our narrative for what happened recently in San Bernardino, the key fact isnt that the perpetrators were Muslims. Muslims comprise 1% of the US population, but are responsible for just 0.6% of the mass shootings in the US in 2015 (2 out of 353) – making Muslims 40% less likely to commit mass shootings than everyone else in the US. You’re way more likely to be shot by a Christian.

That the attack in San Bernardino was an act of terrorism also isnt terribly crucial. This year, twice as many Americans will die of bee stings as they will from domestic acts of terrorism. Four to eight times as many will die from peanut allergies. Ordering these threats from largest to smallest: peanuts, bees and terrorists are really not all that scary.

The story out of San Bernardino is that yet another American went nuts, availed himself of his nation’s cheap and plentiful gun supply, and shot a whole lot of people. This story has played out so many times in recent US history that we hardly need to recite the litany of Columbine, Charleston, Sandy Hook, Colorado, Oregon, etc.

The US does not have a problem with domestic Muslim violence. Nor does it have very much of a problem with domestic terrorism. America has a gigantic problem with guns.

More next week….

 

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We’re All French – Let’s All Be Smart Too

The Paris attack is a tragedy – it is not a call to arms. Following the attack on Charlie Hebdo, we observed,

In the fall and winter that followed Sept 11, 2001, about 30,000 Americans died of the flu – ten times the number that died on 9/11. We should be thankful that in the greater scheme of things, even the worst terrorist attack in history doesnt amount to a whole lot. The US reaction to 9/11, particularly its ill-considered invasion of Iraq, has had far more terrible and enduring consequences. We should bury our dead and mourn, but we should not let our hunger for justice or security erode our most precious liberal institutions and values.

Nothing has changed. In a free society, bad people can more easily do bad things. When they do, our biggest mistake is to make our society less free. As Paul Krugman put it, “the biggest danger terrorism poses to our society comes not from the direct harm inflicted, but from the wrong-headed responses it can inspire.”

French President Francois Hollande has asked to extend the state-of-emergency for an additional three months, expanding the power of the police – a far less dire assault on liberty than was the Patriot Act. But one New York Times editorial writer now argues for a full-scale invasion of Syria and Iraq – seemingly incognizant of the fact that the rise of ISIS is the direct consequence of the last US invasion. According to Roger Cohen,

To defeat ISIS in Syria and Iraq will require NATO forces on the ground. After the protracted and inconclusive Western interventions in Iraq and Afghanistan, it is reasonable to ask if this would not be folly. It is also reasonable to demand – and many will – whether military action will only have the effect of winning more recruits for ISIS as more lives and treasure are squandered. Terrorism, the old nostrum has it, can never be completely defeated. Such arguments are seductive but must be resisted…. Crushing ISIS in Syria and Iraq will not eliminate the jihadi terrorist threat. But the perfect cannot be the enemy of the good.

“Inconclusive” is a charitable term to describe the outcome of the US occupation of Iraq and Afghanistan. “Utter and abject failure” better conveys the reality that neither Iraq nor Afghanistan exist any longer, and that Iraq is now a training ground for international terrorism – something it never was before the US occupation.

As for “the good” that might come of invading Iraq (again) and Syria, we might learn from the example of Israel, which, despite its half-century long occupation of the West Bank and Gaza, failed to curb terrorism through military force. The British military similarly failed in Northern Ireland. This is because terror networks, like ISIS, Hamas and the IRA, are primarily political organizations. They lack proper armies that can be met on the field and destroyed. Their personnel can seamlessly disappear into villages and towns in the face of an invasion, and can persist in the shadows for decades. The power of such organizations lies mainly in their ability to attract new adherents. And while movements come into and go out of fashion, their half life is often measured not in years but in decades.

The Paris attack was ideally calculated to produce fear and anxiety in the people of the city – targeting its best loved playground. The Canal-St-Martin neighborhood is a weekend destination for almost everyone, with hip bars and cafes, inventive restaurants, and a street-life that’s impressive even by Parisian standards. No one who has lived in Paris can fail to appreciate how easily they might have been one of the victims.

Though it’s far easier to type than to actually live by this advice – our best response is to mourn for those we lost; to trust in time to heal our psychological wounds; and above all: to carry on.

 

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Editor’s note: The Liberal Field Guide is off next week for Thanksgiving.

 

Refs:

http://www.nytimes.com/2015/11/16/opinion/fearing-fear-itself.html

http://www.nytimes.com/2015/11/14/opinion/to-have-paris-defeat-isis.html

 

The Benghazi Scandal: Now Under GOP Ownership

The GOP intended Benghazi to be the big scandal that would tear down Hillary Clinton. Benghazi is still hurled about by conservatives seeking to invoke the belief that Democrats are dishonest, soft on security and naive in international dealings. But now Benghazi is fast becoming a byword for the GOP’s incompetence in governing, and their preference for posturing and obstructionism in place of policy making and problem solving.

House majority leader Kevin McCarthy’s public statement – that congressional investigations into Benghazi are deemed successful because they have negatively impacted Hillary Clinton’s poll numbers – should come as a shock to no one. And now a whistleblower has emerged, claiming that the GOP was directing investigative efforts almost exclusively at Clinton. Major Bradley Podliska told CNN that he was dismissed for seeking the truth of the matter, not going along with the witch hunt. Podliska, an Air Force Reserve intelligence officer, is a self-described libertarian who plans to vote for the GOP nominee in 2016.

The nominal purpose of the investigation was to gain insights on making American diplomats safer. When McCarthy revealed that it was really about slinging mud at Hillary Clinton – with taxpayers footing the nearly five million dollar bill – he collapsed under the burden of simultaneously managing reality, along with the GOP lie to conceal it. And now McCarthy is out of the running for Speaker – for speaking the truth!

Consider the extent to which we’ve reduced expectations for the GOP-controlled Congress. As one might praise a puppy who succeeds in watering a square of newspaper, Americans today are encouraged when Congress narrowly avoids government shutdowns, or keeps the nation from defaulting on its debts. No one expects them to address the major issues of the day. Immigration? Banking reform? Tax reform? Entitlements? Gun control? The GOP cant even select a House Speaker – one can hardly expect them to actually govern.

The difference in substance between GOP and DNC presidential debates is striking. Democrats offer specific, workable solutions to real-world issues. The Affordable Care Act is just one example of Democratic legislation, which has since succeeded in reducing the budget deficit, slowing the growth of healthcare costs to the lowest rate ever recorded, while insuring millions more than ever before, with the economy and employment growing all along the way.

By comparison, when GOP presidential candidates are asked about how they would improve the economy, they trot out the same tax cuts for the wealthy that drove the country deeply into debt when similar policies were enacted in the distant and recent past. When asked about their solution for health care, they tell you to pay through the nose, go to the ER, and accept impoverishment and early death – though never in so few words. Gun control? Stuff happens. Global warming? Far better would it be to evacuate Florida than to tax wealthy GOP patrons job creators. Simply put: the GOP has a problem with reality.

Just as McCarthy strained to separate the real world from GOP-scripted fictions, so the real Benghazi is breaking through the facade. It is the story of a tragedy, exploited for political gain, by a party that has lost its ability to govern, for whom leadership is all about the maintenance of fictions, not the identification of issues and the elaboration of solutions.

 

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Refs:

http://www.cnn.com/2015/10/10/politics/benghazi-committee-investigation-political-hillary-clinton-brad-podliska-lawsuit/

https://www.yahoo.com/politics/ex-benghazi-investigator-this-has-become-a-160519004.html

 

 

VW Buggin’ Out

News of Volkswagen’s fraudulent evasion of EPA and EU regulations is astonishing. Emerging facts show that VW sold 11 million cars and trucks that were secretly designed to run clean only when they were being emissions-tested, but to run dirty otherwise. The difference between clean and dirty performance is enormous. Under dirty operation, VW diesels emit up to forty times more nitrogen oxides (NOx) than they do under clean operation. NOx is known to cause respiratory problems – sickening and killing many thousands of people each year.

The consequences that VW now faces are no less staggering. In the US alone, where fewer than 5% of the relevant vehicles were sold, potential EPA fines exceed $18 billion. Individual states might also sue, and about 25 class-action suits on behalf of consumers have already been initiated. Criminal prosecution is also a possibility.

VW officials have admitted to covertly incorporating a “defeat device” in some of its diesel engines. According to EPA regulations,

(§86.1803-01) Defeat device means an auxiliary emission control device (AECD) that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use….

VW isnt the first automaker to get caught trying to sneak one past EPA. In the 1990s, Ford, GM, and several truck manufacturers paid fines for employing similar cheats, to misrepresent vehicle emissions for the benefit of EPA, while enabling those vehicles to have far better fuel economy than they could have otherwise attained.

And thus we come to our point. Lots of waste comes out of a car’s tailpipe, and present technology allows us to make tradeoffs between different kinds. In many cities – Los Angeles, Phoenix, Houston, London, Paris and Beijing, for example, where air pollution is a problem – we prefer to minimize the release of NOx. But we pay a price with diminished fuel economy, releasing significantly more carbon dioxide (CO2) per mile driven. While NOx directly harms human health, CO2 contributes to global warming. And there are many parts of the world that arent given to air pollution, where it would be preferable to allow cars to achieve better fuel economy, releasing more NOx, but less CO2.

EPA has always taken a one-size-fits-all approach to automobile emissions, which is reasonable, given that cars are mobile. A car sold in Florida, which has good air quality, can readily find itself in California or New York. But today, used in conjunction with a GPS sensor, VW’s engine software could be husbanded for a good purpose. Depending on a vehicle’s location and the time of year, an engine could alternatively tune itself to achieve the highest possible fuel economy – releasing the least possible CO2 in areas where NOx pollution is not a health hazard – but then tune down to minimize NOx release in localities where air quality is problematic, accepting poorer fuel economy as a tradeoff.

We arent excusing VW for its considerable wrongdoing. Rather, we’d take this occasion to consider the options that modern engine technology affords us, in light of our competing environmental objectives.

 

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Sick Pay Pays II

Last week we discussed how the problem of “adverse selection” works to undermine insurance markets, including the market for paid sick leave and unemployment insurance. We noted that the cure is to make insurance mandatory for all – as President Obama did recently, by making paid sick leave mandatory for employees of federal contractors. In developed countries, many forms of insurance are mandatory: disability, unemployment, old age, auto, and health are among the most common.

But even universal insurance faces the “moral hazard” problem. That’s the fact that people, for good and bad, behave differently when they have insurance. Old age insurance (like social security) may diminish your incentive to save for retirement. Auto insurance may facilitate riskier driving. Unemployment insurance may make you less deferential to your boss. And indeed, all else being equal, people with paid sick leave should be expected to miss work more often than people without it.

But the key insight about moral hazard, is that we are still better off with insurance than without it. In other words, while it imposes a cost, that cost is almost invariably exceeded by the benefits. For example, it’s been suggested that unemployment insurance and social security have the combined effect of allowing people to take riskier decisions on where to work – giving a hi-tech start-up a chance, for example, instead of playing it safe with an established firm. In the aggregate, such risk-taking may be a significant boost to a modern economy dependent upon constant innovation.

Auto insurance makes transportation risks more manageable, letting people commute to their job of choice; while also facilitating distribution networks, giving consumers more options. Health insurance correlates with better health, and can reduce costs when people make use of preventive care before a problem gets out of hand and lands them in the ER.

There is no free lunch. Paid sick leave, ultimately, is paid for by employees, reducing their wage compensation, leaving total compensation (including benefits) unchanged. The same is true for paid maternity leave, unemployment insurance and even social security. While an employer nominally pays out for those items, direct employee compensation is reduced by the same amount.

Taken together, benefits like paid sick leave confer a further benefit: they seem to make employment more desirable, such that more people offer themselves on the labor markets. This is seen in higher labor-force participation rates in the working-age population of countries that have liberal labor standards; and in relatively low labor-force participation rates in the US.

Most people want benefits with employment – including caps on hours, unemployment insurance, paid holiday and vacation time, and paid sick and maternity leave. But the market has no route from this equilibrium (their absence) to another equilibrium (their ubiquity), without help from legislation.

The point is not that a central planner knows better than individuals at the point of contract. Rather, we must recognize that there are obstacles that prevent market participants from coming to terms. Well-tailored labor regulations can ameliorate these obstacles, to let the market work its magic.

 

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Sick Pay Pays

On Labor Day, President Obama issued an executive order mandating that federal contractors offer paid sick leave to their employees. Such mandates serve as a back-door means of improving labor standards, albeit for a relatively small number of workers.

Most countries make paid sick leave mandatory for full-time employees. The US is alone among developed countries is not doing so. Outside of a few American cities and states that legally require paid sick leave, most Americans are at the mercy of their employer.

One can fairly ask why we shouldnt simply leave it to the markets. If paid sick leave is really so desirable, one can argue, laborers will ask for it, and employers will offer it. But the problem is that paid sick leave – like paid maternity leave – is a lot like insurance, and beset by the same problems. Chief among them is that insureds typically have better information on their own circumstances than might a would-be insurer. And so when someone asks for insurance, an insurer can reasonably infer that that person – for reasons that may be undetectable – is more likely to be a bad risk than someone taken at random.

That simple fact naturally leads to a feedback loop, whereby insurance gets pricier, making the people who are willing to pay that price even worse risks; which in turn makes insurance pricier still, and so on and so on until the market fails – with many people who want insurance, and firms who would provide it, unable to come to terms.

This dynamic was famously observed in the market for used cars, in a piece entitled “The Market for Lemons,” which won for its author, George Akerlof, the Nobel Prize for economics. People are suspicious about used cars because some defects are readily known to the seller, but are exceedingly difficult for a buyer to ascertain. Because of the buyer’s perception of risk, his offer price drops. As a consequence, sellers of good used cars cant get fair compensation, making them less likely to bring them to market. This dynamic feeds on itself until the market contains only the worst used cars.

You can readily envision the same problem occurring in the market for unemployment insurance, if it werent mandatory. A worker asking for such insurance at the time of hire would flag himself as a bad risk – one who is likely to be let go. He might be passed over for a position simply for asking! Consequentially, we should expect unemployment insurance to get more and more expensive; and as it does, only the most at-risk employees would be willing to pay for it – and so on and so on, as the market fails.

This same problem befalls virtually every form of insurance – including disability, old age, and health. The cure is to make insurance mandatory, so that people cant “self-select” into or out of insurance. Insurers are then better able to estimate the risks, because they can look at the population as a whole.

Once you solve the “adverse-selection” problem (also known as the “asymmetrical information” problem), you run into the next big issue in insurance markets: moral hazard, which we’ll take up when the Field Guide returns next week.

 

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