Matt Yglesias

Endgame

Hot, hot summer in hell:

— Jonathan Alter says Pelosi and Boehner should debate before the midterms.

— College won’t get more affordable until we create incentives for schools to stop hiking tuition.

— My address earns a perfect 100 on WalkScore.

— 8 percent of babies born in the United States have at least one undocumented parent.

— Legal immigration helps Social Security’s finances but illegal immigration helps even more.

— Conservatives are killing their future by pissing off Hispanics.

August in DC weather makes me think of “Aerobicide”

Uncontrolled Intersections

Probably my “craziest” policy view is that we should drastically scale back our use of traffic lights and other road controls. But there’s plenty of evidence that it works. It works in small towns in England:

And in big third world cities:

Read all about the late, great Hans Monderman and his mind-blowing ideas on this subject.

Perhaps Mondermanian positions would strike many as less-implausible if they realized that the typical approach to traffic management is largely a legacy of Herbert Hoover’s work as Commerce Secretary and the “Model Municipal Traffic Ordinance” he promoted. Boo Hoover.

Economic Consequences of an Israel-Iran War

He’s trying to paint a bleak picture, but I think Jeffrey Goldberg’s new piece’s description of the consequences of a war between Israel and Iran winds up understating the economic damage that might be wrought:

They stand a good chance of changing the Middle East forever; of sparking lethal reprisals, and even a full-blown regional war that could lead to the deaths of thousands of Israelis and Iranians, and possibly Arabs and Americans as well; of creating a crisis for Barack Obama that will dwarf Afghanistan in significance and complexity; of rupturing relations between Jerusalem and Washington, which is Israel’s only meaningful ally; of inadvertently solidifying the somewhat tenuous rule of the mullahs in Tehran; of causing the price of oil to spike to cataclysmic highs, launching the world economy into a period of turbulence not experienced since the autumn of 2008, or possibly since the oil shock of 1973; of placing communities across the Jewish diaspora in mortal danger, by making them targets of Iranian-sponsored terror attacks, as they have been in the past, in a limited though already lethal way; and of accelerating Israel’s conversion from a once-admired refuge for a persecuted people into a leper among nations.

I don’t know nearly enough about the oil industry to be sure whether prices really would spike to cataclysmic highs (seems plausible enough, though) but if such price spikes do happen the consequences would be much worse than either 2008 or 1973. That’s because the pre-crisis economic conditions in the early seventies were totally fine, one of the reasons Nixon cruised to re-election in ‘72:

If you took all our current problems and plopped a giant supply-side on top, we’d be really screwed. You’d have, for example, a whole new round of state and local budget crises. What’s more, you’d have inflation. Right now it’s frustratingly difficult to persuade monetary policymakers to do what’s needed to boost growth, but it might be impossible if rising energy prices led to a high headline inflation rate. Obviously, insofar as the Israeli government believes that national survival is at stake these kind of issues won’t persuade them. But the American government needs to consider the full range of consequences here, which will be felt all around the world.

What’s Really Going On With New Jersey Teachers?

By Ryan McNeely

I read this morning that Gov. Christie (R-NJ) is going to apply for $268 million in federal education aid authorized by the state aid bill — or, as conservatives have come to call it, the “teachers’ unions bailout bill” – which could save 3,900 teacher jobs in New Jersey. Though he had publicly waffled on whether to apply for the funds, Christie follows in a long line of conservative governors who ultimately decided that it was better to take the benefits for their constituents rather than join with Washington Republicans and continue to oppose congressional action on ideological grounds. Had Christie not applied for the funding, the federal government would have simply “bypass[ed] the state government” and distributed the funds itself. But good for Christie to relent and allow New Jersey to have a say in the distribution of these dollars.

But I was wondering — what is really going on with teachers’ jobs in New Jersey? In nearly all the reporting on this issue, there is a citation to a survey from the New Jersey School Boards Association that shows that “more than 80 percent of districts earlier this summer reported they would have fewer teachers this fall.” That sounds extremely dire, and the figure is being widely reported. In this story about the survey, however, we get a passing tidbit in the third paragraph: the survey was “completed by 40 percent of the state’s school districts.”

Well, I don’t think this survey tell us very much, then. Taking a look at the NJSBA press release, you don’t see which districts returned the survey and which did not, so you have no idea if the 40% of survey respondents are representative of NJ school districts as a whole. In fancier terms, the survey seems internally valid for those districts that replied, but the results are not externally valid to all NJ school districts, as many reports seem to imply. 40% is a low response rate for this type of survey; for good results, you’d want to see something like 80% or higher response rate, or else a random sampling of school districts to be surveyed.

You can construct all sort of hypotheticals — with varying degrees of plausibility — as to why the districts that did respond might not be “normal” districts. Perhaps they have had to lay off a high number of teachers and were very motivated to report back to the NJSBA about their plight. In the other direction, perhaps districts suffering from massive budget cuts and teacher layoffs didn’t have the staff time to complete the survey. Whatever the case, it’s a shame that type of thing has formed the basis of much of the reporting about the true education situation in New Jersey.

Opportunistic Disinflation

On the subject of Neil Irwin’s Fed coverage, this is a very informative item but it raises a bigger question than anything it resolves:

My best guess is that the decision of whether to resume asset purchases and expand the balance sheet is binary, not linear. If growth truly appears to be stalling out, with second half GDP growth coming in somewhere south of 2 percent (forecasts are in the 3 percent plus range now), and/or year-over-year core inflation gets below about 0.8 percent, the Fed starts to talk about the big guns. If they pull the trigger on those guns, it would be an announcement of another asset purchase program in the hundreds of billions of dollars, primarily of Treasury bonds.

Let’s just assume FOMC members don’t care about employment at all. For a while now, they’ve been “implicitly” targeting a two percent inflation rate. That was everyone’s understanding of what Greenspan-era Fed was trying to do. Inflation over two percent was a problem. With inflation below that, you want the economy to grow. Irwin seems to be reporting here that the Fed has secretly switched to a 1 percent inflation target in keeping with a strategy of “opportunistic disinflation”. If this is what’s happening, then an inflation rate below 0.8 percent might still be viewed as alarmingly low but otherwise they’ll try to keep us in recession until long-term expectations fall to about one percent.

Something many people have noticed is that even though the Fed keeps saying that long-term inflation expectations are stable they’re actually not stable at all they’re falling:

It’s not credible that the FOMC has failed to notice this, and the most parsimonious explanation is that it’s happening because this is what they want. But members of congress (and insofar as possible, reporters) really need to be interrogating the Fed about this. It’s one thing for monetary policy to be operationally independent of short-term politics, and another thing for the setting of long-term policy goals to be detached from democratic supervision and public scrutiny.

Old Media FTW

Since I’ve done a fair amount of complaining about the media under-rating the importance of monetary policy, it’s worth noting that the print Washington Post got this right and made Neil Irwin’s story on the FOMC meeting its lead story:

The next step is to recognize that if Fed decisions are front-page news, then the fate of Barack Obama’s nominees to the Federal Reserve Board of Governors is also a crucially important story.

Demand-Responsive Parking in San Francisco

People generally understand that there were shortages and long lines for things in the Soviet Union because goods weren’t priced according to supply and demand. And people generally understand that, in general, price controls will tend to lead to either gluts or shortages. And yet few people understand that this same principle applies to on-street parking. In many places, it’s hard to find and that’s because it’s not priced properly. San Francisco is trying to change things with its SFPark initiative:

SFpark will charge the lowest possible hourly rate to achieve the right level of availability in both garages and at metered spaces. This project is not about raising parking revenue; it’s about making parking easier to find. SFpark is designed so each block and each garage maintains have about, an average, 20% availability. [...]

SFpark will use demand-responsive pricing to even out parking availability and reduce the need for circling. In pilot areas, meter pricing can range from between 25 cents an hour to a maximum of $6.00 an hour, depending on demand. During special events, such as baseball games, hourly prices may temporarily increase beyond the $6.00 ceiling. Parking rate changes will also affect City-owned garages and lots in pilot areas. Since many City-owned garages are currently underutilized, the prices are likely to decrease, which will attract more parking demand to City garages.

A nice next step would be for the city to get out of the garage-owning business. In a city where street parking is priced in a demand-responsive way and developers are not subject to regulatory mandates to construct parking, one assumes that parking garages and parking lots will still be constructed. If you want to drive somewhere then you’ll need to park your car, and since people often do want to drive there’s money to be made charging them for the privilege. But regulatory mandates and city-owned garages tend to ensure that parking is oversupplied.

The Case for Judicial Term Limits

Andrew Gelman and John Sides have an interesting exchange about the merits of creating fixed tenure for Supreme Court justices. I agree with Gelman that seems like a case where Sides is suffering a bit from an occupational hazard of political scientists confronted with proposals for reform—proponents oversell them, and political scientists become unreasonably skeptical in response.

At any rate, I’m a proponent of this reform. The strongest argument I can make in favor is that it would create a less-random relationship between election outcomes and the composition of the judiciary. Right now, if John Roberts and Samuel Alito decided to go out on a double-date with their wives, and a drunk driver hits their car killing all four passengers, Barack Obama would wind up reshaping the course of American law for decades. If instead he merely found himself appointing replacements to serve out their terms we’d much reduce this kind of arbitrariness.

Then there are two related points. One is that the current system creates too many incentives for a physically or mentally incapacitated justice to try to hang on to his seat until someone more ideologically congenial gets into the White House. Conversely, the current system causes the age of a nominee to loom too large in the decision-making calculus. In exchange, life tenure accomplishes basically nothing that a longish fixed term plus a pension wouldn’t accomplish. America makes it hard to tinker with the constitution (a mixed bag, in my view) so this almost certainly won’t happen unless some turn of events focuses national attention on the potential problems embedded in the current system. But I think making the point that this is a bad system is important anyway, since there’s always the risk that foreign countries engaged in democratic transitions will decide to emulate our model.

More Boldness Needed

Cato’s Neal McClusky goes on at some length about how horrible it is that he saw an American Recovery and Reinvestment Act sign while visiting Shenandoah National Park with his wife and kids. But isn’t this small beer? From a libertarian perspective, shouldn’t the problem here be with the existence of a National Park rather than its signage? Let’s get the government’s grasping hands off our parks!

At a minimum, I’d like to see someone make the case for National Park abolition. What’s more, there’s a whole range of possible policy options short of totally eradicating the system. Land could be set aside exclusively for “National Park Use” and private park operators invited to bid for the right to operate for-profit park facilities. Individual citizens could be granted National Park Vouchers. Park socialism will inevitably lead to rationing, and economic stagnation.

More “Leadership” Can Be Counterproductive

Politico reports on the growing discontent with Barack Obama in Spanish-language media:

Univision’s Jorge Ramos, an anchor on the nation’s largest Spanish-language television network, says Obama broke his promise to produce an immigration reform bill within a year of taking office. And Latinos are tired of the speeches, disillusioned by the lack of White House leadership and distrustful of the president, Ramos told POLITICO.

“He has a credibility problem right now with Latinos,” Ramos said. “We’ll see what the political circumstances are in a couple of years, but there is a serious credibility problem.”

As readers will recall, I’m generally skeptical of claims that lack of presidential action is the cause of legislative non-outcomes. In the case of immigration, there was a bipartisan congressional coalition behind reform and the key Republican members of that coalition decided to defect. The president can’t perform inception on Mitch McConnell and make him want to do this.

But on this specific issue, I think there’s reason to believe that presidential leadership would actually be counterproductive. In Beyond Ideology, Frances Lee assembles some evidence—best read about on Ezra Klein’s blog—that when Presidents insert themselves into legislative debates, that induces partisan polarization. Immigration has always been an issue that scrambles both parties coalitions, and I don’t think that’s changed today. A more polarized dynamic is only going to make reform harder to achieve. Of course the president would have a role in pushing a bill over the finish line, but success requires a starting baseline of genuine cooperation on the Hill.

I think the problem here is largely one of over-promising. Something like “as President, I’ll try to play a constructive role in any immigration reform compromise that may or may not arise in the course of congressional negotiations!” isn’t much of an applause line.

The Incentive Compatibility of Dictatorship

Dani Rodrick has a widely praised piece about the superior economic performance of liberal democracies relative to authoritarian countries:

Democracies not only out-perform dictatorships when it comes to long-term economic growth, but also outdo them in several other important respects. They provide much greater economic stability, measured by the ups and downs of the business cycle. They are better at adjusting to external economic shocks (such as terms-of-trade declines or sudden stops in capital inflows). They generate more investment in human capital – health and education. And they produce more equitable societies.

Authoritarian regimes, by contrast, ultimately produce economies that are as fragile as their political systems. Their economic potency, when it exists, rests on the strength of individual leaders, or on favorable but temporary circumstances. They cannot aspire to continued economic innovation or to global economic leadership.

Rodrick observes that the apparent exception of China is really quite untested. China is much less poor than it was 15 years ago, but it’s still poorer than El Salvador so it’s not clear what kind of model this is.

Both the strength and the weakness of this argument, I think, is captured in the observation “[f]or every Lee Kuan Yew of Singapore, there are many like Mobutu Sese Seko of the Congo.” The strength—historically that’s been the case. The weakness is that if you’re a modern-day dictator, the lesson of history is clear that the less-corrupt, less-exploitive Singapore model was not only better for the Singaporeans it was better for the dictator. For all the same reasons that over the long term the revenue-maximizing tax rate equals the growth-maximizing tax rate, over the long-term dictatorship is more incentive-compatible than Mobutu seems to have realized.

Historically, few authoritarian regimes have seen that their own self-interest is best maximized via enlightened policies. But at least one interpretation of what’s happening in China is that the most important authoritarians around have figured this out (Abu Dhabi also seems to have) and this is driving major improvements in human well-being. It seems to me that the clearest thing you can say about growth and democracy is that when growing democracies hit economic downturns, what tends to happen is you vote the incumbents out of office. But when growing dictatorships hit economic downturns, what tends to happen is you throw the dictators out of office. I’m not sure whether China’s leaders can keep delivering growth, but if they can’t it’ll be hard for them to stay in charge.

Overselling vs Doing Nothing

Tyler Cowen cautions us not to oversell the prospects of monetary stimulus. I would like to not be overselling them, but it’s hard to avoid overselling things when policymakers keep not doing them. It’s true that as Cowen says we don’t know how many currently unemployed people could be put back to work by more aggressive monetary measures, but the flipside is that we know the sign of the change would be positive. Right now the inflation rate is below-target and the price level is below trend. There’s some greater-than-zero quantity of currently idle resources that could be mobilized before a higher level of aggregate demand pushed the price level above trend.

Does that mean 6 percent unemployment or only 8.5 percent unemployment? I have no idea, but there’s only one way to find out and that’s to go see.

In terms of structural issues, I think that all countries at all times feature some of these and could and should be working on improving the fundamentals. Recessions tend to turn minds out of cheerleading mode and draw attention to these issues, but they’re not necessarily propitious moments for dealing with them. The tendency is for all incumbents and all policies they promote to become unpopular during recessions, which makes it hard to build support for anything aimed at reaping long-term benefits.

The Fed should do its job, and then everyone will get off their cases and go back to ignoring monetary policy. If it doesn’t, people like me are going to have to start publishing tedious articles complaining about the absurd governance structure of the FOMC.

Impossible Deals

Will Wilkinson keeps writing up a storm on his quirky and implausible effort to build a pro-immigration case for ending birthright citizenship. You can read his latest here and here and a pretty persuasive reply from Tim Lee if you’re interested.

My bottom line is that I’m not particularly interested in purely hypothetical compromises. If immigration restrictionists really feel so strongly about the injustice and immorality of granting citizenship to the US-born children of undocumented migrants that’s they’re willing to make concessions on other fronts, that’s definitely something I would encourage members of congress to explore. But as best I can tell, they’re not even coming close to offering anything like that. So what are we even talking about? There are a lot of different moving pieces to the immigration debate, but it’s impossible to move any of them forward as long as such a large political bloc is basically against anything other than wall-building and deportation. What’s more, since modifying the 14th Amendment would require a constitutional amendment, it’s always going to be one of the least politically viable potential points of compromise.

The Cost of Don’t Ask Don’t Tell

From the resignation letter of West Point Cadet Katherine Miller:

I have created a heterosexual dating history to recite to fellow cadets when they inquire. I have endured unwanted approaches by male cadets for fear of being accused as a lesbian by rejecting or reporting these events. I have been coerced into ignoring derogatory comments towards homosexuals for fear of being alienated for my viewpoint. In short, I have lied to my classmates and compromised my integrity and my identity by adhering to existing military policy.

I think many straight people, including well-meaning ones, continue to suffer from a failure of imagination in terms of what’s involved, in practice, in staying “in the closet.” As Miller is observing here, it’s essentially impossible to socialize regularly with a group of people without either lying to them or else revealing something about whether you date men or women.

Endgame

See him every day:

— I used email to coordinate message with Kevin Drum.

— College wage premium is substantially higher in the US than elsewhere.

— DC on pace for its least-murderous year in decades.

— Civilian casualties and American war aims.

— The flooding in Pakistan is much worse than I realized.

I think there’s mounting evidence that Matt Sharp was the creative mind behind Pinkerton and the Blue Album. Here’s the Weezer/Rentals collaboration “I Just Threw Out the Love of My Dreams”.

Elite Isolation

It seems to me that this chart is the key to understanding today’s political economy:

Virtually every single member of congress, every senator, every Capitol Hill staffer, every White House advisor, every Fed governor, and every major political reporter is a college graduate. What’s more, we have a large amount of social segregation in the United States—college graduates tend to socialize with each other. And among college graduates, there simply isn’t an economic crisis in the United States. This is not the best of times, but it’s perfectly rational in gradland to be balancing concern about the labor market situation with dozens of other concerns. If you did anything, you’d probably step in to prevent teacher layoffs, which is a clear and present danger to a large bloc of college graduates. But beyond that, no need to panic.

In the Long Run, There Is No Curve

Dylan Matthews did an interesting survey yesterday, asking various figures what they think the revenue-maximizing tax rate is. The liberals generally look at the research and conclude that the Laffer Curve Inflection Point is in the 60-70% range, while the conservatives duck and cover. But it’s Greg Mankiw who, I think, makes the most important point, to wit: “the short-run answer and the long-run answer are quite different . . . the long-run answer is actually more important for policy purposes than the short-run answer.”

To perhaps put this in a more pointed way, over the long-run the revenue-maximizing tax rate and the growth-maximizing tax rate should be identical. Guinea and Portugal both have about 10 million people, but the government of Portugal has dramatically more revenue simply because Portugal is so much richer. And that’s how it works in general over the long-term. Government revenue will increase rapidly if the economy grows rapidly and not otherwise. The question is whether short-term revenue is valuable because it’s funding important growth-enhancing public services, or whether short-term revenue is harmful because it’s funding waste and bloat.

Meanwhile, the growth implications of tax system design—how do you raise your revenue, not just how much revenue do you raise—are much more important than the political debate commonly recognizes.

Ideological Positioning of Recalculation

Vienna, Austria

Something I ponder every once in a while is the strange ideological positioning of “real business cycle” or “recalculation” or “structural” or “Austrian” analyses of the current recession, or recessions more generally. These notions are usually put forward by people on the right, very strict libertarians most typically. And the idea of how the proposition fits together with the larger ideology is that the structural analysis serves as a bullwark against government intervention to stabilize the economy.

This all seems to me to suffer from a paucity of ideological imagination. The problem, as Jim Henley points out, is that the “Recalculation Story,” if true, implies radical underlying flaws in the capitalist economic model that call not for small-bore government intervention but for wholesale rethinking of the way the economy functions. I others would look at this differently if they, like me, had been raised in a family that contained various Marxists. From inside a “left” point of view, real business cycle theory is a radical theory that rears its head in any downturn as evidence of the systemic crises of capitalism and perhaps the need for revolutionary change. New Keynesian insistence that timely public policy can, if implemented correctly, stabilize the situation is a very status quo pro-market point of view. The point of the New Keynesian analysis is that mass unemployment, where it exists, reflects a failure of the political system—exactly the kind of thing a libertarian should expect will happen now and again—rather than a failure of market exchange.

John Maynard Keynes understood himself to be a liberal trying to preserve a free enterprise system threatened by communists and fascists. Milton Friedman, I think, also understood that the grinding misery of the Great Depression only led to unhealthy politics and was an advocate of bank bailouts, helicopter drops, and all the rest to prevent disaster.

In 2010, of course, we’re not going to go communist. Which is nice. But if you tell people that high unemployment is going to exist for a long long time, and there’s nothing the government can or will do about it, then of course people are going to support policies that make the economy less flexible and less open to imports and foreigners. If laid-off workers can’t find new jobs, then protecting incumbent sites of employment from competition becomes priority number one.

It’s true that if you adopt this view you do need to give up some libertarian purism. If periodic state intervention is required for the purposes of macroeconomic stabilization then you legitimize state intervention to, for example, help poor people. But the battle for that kind of purism is lost anyway. What you gain by embracing stabilization policy and treating the political problems of how to do it effectively as a problem to be solved rather than a reason not to try is an account of why it is that 9.5 percent unemployment doesn’t discredit the underlying principles of a market economy.

The Latest from Our Monetary Overlords

While cable news was obsessing over the non-story of disgraced former Senator Ted Stevens’ death, the Fed’s Open Market Committee released a mildly dovish statement paired with minor action—they’ll roll over existing positions, which you can interpret as either moderate expansion or else maintaining the status quo. Kansas City Fed President Thomas Hoenig, who wants you to lose your job amidst a double-dip recession, dissented from the right. The stock market seemed to immediately leap upwards, underscoring the fact that you improve “business confidence” by improving growth prospects rather than by catering to businessmen’s political opinions.

What we’re left to wonder is: Would this have gone down differently if Barack Obama’s three nominees were in place? And if it would have, how different would the midterms look? This is the biggest political story of the week by far, and you’ll see virtually no coverage of it.

Civilian Casualties Surging, Most Caused By Insurgent Fighters

The Obama/McChrystal era combat doctrine in Afghanistan places higher emphasis on avoiding civilian casualties, but the increased level of fighting means civilian casualties are way up and mostly caused by anti-government fighters:

In a semiannual report, the United Nations Assistance Mission in Afghanistan said the number of civilians wounded and killed in the conflict had increased by nearly a third, 31 percent, in the first six months of the year.

Seventy-six percent of the civilian casualties were attributable to “antigovernment elements,” the report said, using United Nations terminology for insurgents. That was an increase of 53 percent over the same period, Jan. 1 to June 30, in 2009, it added.

As with the sad case of Aisha there’s no denying that the “bad guys” here are the brutal Taliban and other insurgents who are responsible for the bulk of the bloodshed. But that still leaves the question of who our efforts to fight them are actually helping and at what cost.

When Poverty is a Step Up

Scott Winship runs through some historical public opinion data and finds that while people get more pessimistic about their children’s future during recessions there’s no overall trend toward greater pessimism when you ask parents whether their own kids will do better than they have. This reminds me of a point that I feel often goes missing from discussions of wage and income stagnation, namely that when we compare the US population in 2010 to the US population in 1970 we’re not comparing the same group of people at two different points in time. Nor are we comparing a group of people to that group’s parents. Lots of people in the United States in 2010 either lived in Mexico in 1970 or else have parents who lived in Mexico in 1970, and smaller-but-not-insubstantial numbers of people come from other countries.

In particular, a very large proportion of low-income people in the United States are immigrants. I think the spin which Heritage’s Robert Rector puts on these facts in his “Importing Poverty: Immigration and Poverty in the United States” is fairly perverse, but facts like “First-generation immigrants and their families, who are one-sixth of the U.S. population, comprise one-fourth of all poor persons in the U.S.” and “Minor children of first-generation immigrants comprise 26 percent of poor children in the U.S.” are important to keep in mind when thinking about historical trends.

Rector seems to think the upshot of this is that we should kick all these people out, so they can be even poorer in developing countries, and then make our poverty statistics look better. That’s nuts. The real upshot of this is that things aren’t as bad as they sometimes seem—that many of the worst-off people in America are in fact engaged in upward mobility relative to where they started in life. That doesn’t mean we should be complacent about the education, health care, nutrition, and infrastructure needs of poor people.

We Don’t Need Fashion Copyrights

Oftentimes, discussions of copyright policy hinge on hypotheticals. What if you couldn’t copyright recordings of songs? What would happen then? Maybe nobody would record new songs. Or maybe the quality of new recordings would be abysmally low. What would we listen to then? Won’t somebody think of the children?

Fortunately, in the realm of fashion we don’t need to speculate. We know what a world without fashion copyrights would look like, because we live in one today and we’ve always lived in one. It’s a world full of innovation in the field of design, and also full of various kinds of knock-off. Fashion leaders introduce new concepts, and cheaper imitators come along and follow the pack. In order to remain distinctive, the leaders are driven to further imitate. Meanwhile, everybody has plenty of clothes and styles in tie-width, skirt-length, etc. oscillate around. Yet somehow fashion designers and the members of congress who love them keep coming back to Washington looking for government-sponsored monopolies. The latest version of legislation to allow fashion copyrights has Senators Boxer, Feinstein, Hatch, Graham, and Hutchison as co-sponsors along with lead author Chuck Schumer.

Regulatory Chutzpah in Silver Spring

I tend to argue that a lot of local business regulation is really just a mask for rent-seeking by incumbent firms who don’t want competition. But I don’t expect the rent-seeking incumbents to just come out and say that’s what’s happening. And yet here’s Elahe Izadi reporting from Silver Spring on Nando’s Peri-Peri attempting to engage in voluntary exchanges of chicken for money:

he general managers from those four restaurants voiced concern that the addition of Nando’s to the mix would hurt their bottom line. They submitted a letter to the board, protesting the award of the liquor license, arguing it would reduce business for existing restaurants.

The letter literally argues that “[a]pproving any additional licenses in this market would be merely causing more difficulties for existing businesses in an environment in which no additional demand exist.” Even if this is true, it would be an insane reason to deny a license. If we assume a fixed quantity of demand for Silver Spring dining, then it’s perhaps true that opening a Nando’s will drive the Macaroni Grill or the Red Lobster (to name two of the protesting businesses) out of business. But that’s only going to happen if customers prefer Nando’s. A firm that’s only staying in business because it’s persuaded local regulators to block new entrants is not the kind of firm your community needs. If a neighborhood only has the customer base to support four restaurants, then you still want as much competition as possible to ensure that you get the four best dining options possible.

Fortunately, the Montgomery County Department of Liquor Control found this unpersuasive and granted the license. But the fact that restaurants might even think “we don’t want to let competitors take our customers” was a potentially persuasive argument is telling.

Why Scientific Research on Animals Is Worthwhile

As we’ve been noting Senators Tom Coburn and John McCain have decided recently that all endeavors that involve public funds flowing to animal research are funny-sounding, and therefore examples of waste. The reality is that most of us are interested in promoting human health, and you do this in part by studying other living creatures:

Snail venom in a pill could offer powerful relief for people who suffer from severe and chronic pain.

It may seem an unlikely source of pharmaceutical inspiration, but the chemicals that some snails produce have potent effects on the human nervous system. This makes them promising sources of drugs that could dull the pain of cancer, diabetes, multiple sclerosis, HIV/AIDS, car accidents and other conditions.

In the latest advance, researchers have designed a venom-inspired medication that can be taken orally — a leap forward from previous forms that needed to be injected directly into the spinal cord.

As I’ve been saying, if you want to make the case that public support for scientific research in general is a mistake, you’re welcome to do so. But it’s a difficult case to make. Growing the stock of human knowledge has large benefits that it’s generally impossible to fully internalize, so subsidizing basic research makes sense.

Debt Dynamics

Norm Coleman, former Minnesota Senator and current head of the American Action Forum, alleged that “only Washington politicians and limousine liberal economists would think that going further into debt would help you get closer to getting out of debt.”

If that’s true, then the entire existence of business lending becomes somewhat puzzling. In reality, it’s clear that going deeper into debt can improve your financial well-being in a wide variety of circumstances. You’re a truck driver and your wife’s a waitress. If she stops working to go back to school and finish her nursing degree, you’ll lose income and go deeper into debt. But nurses get paid a lot more than waitresses, so going deeper into debt will increase your family’s prosperity. Or you run a popular, profitable sandwich shop that’s located in a building you bought with borrowed money. Revenue easily covers the cost of the mortgage. The opportunity arises to expand to a second location in a new neighborhood with little competition and favorable demographics, but you’ll have to borrow more money in order to expand. Again, going deeper into debt will increase your business’ prosperity.

In all cases, what’s relevant is not the debt but the cost of interest and the merits of the underlying proposition. In the case of the US government during a recession that features low interest rates, it makes tons of sense to borrow money in order to do things that are genuinely useful or that mobilize genuinely idle resources.