Picking Pareto's Losers

Picking Pareto’s Losers

I was having an interesting conversation about inequality and political corruption with an economist (I know, it sounds like the start of an esoteric joke) when he said, “(the) economist’s gold standard is Pareto improvement or loss.” 

What, I hear you cry, is a Pareto Loss?  At the risk of disappointing my friend (who is very likely on to me anyway) I freely admit that I had to look it up.

“Pareto” was Vilfredo Pareto (Vilfie, to his friends?) a 19^th and early 20^th Century Italian economist who later turned to sociology.  A “Pareto Efficiency” is a essentially a state of equilibrium, an allocation of resources in which it is impossible to make anyone better off without taking from someone else.  A “Pareto Improvement” is when reallocation makes at least one person better off without taking from anyone else.  And a “Pareto Loss” occurs when the aggregate loss to others exceeds the benefit to the person or group benefitting from the reallocation. 

To return to the conversation, I posed the following hypotheticals:

My town government owns a building in a prime location that it offers to the public for $10M cash, thirty days.  The appraised value is, say, $15M, but the government has a bond coming due and needs cash quickly and can’t wait for an extended appraisal, due diligence, and bidding process. 

I know it's a great deal, but I don't have $10M.  Jim, the richest man in town, has the money and can do the deal  He reaps the benefit of the below market price.

Or, suppose a new Mayor and Town Board are elected, and Jim is their major campaign contributor.  There is no financial crisis, but the new Mayor pronounces himself all about “privatization” and so before the new drapes are installed in his office, he calls Jim and as a thank you, cuts a secret deal with him—no outside bidding, and the same steeply discounted price ($10M for the $15M building.)

To me, as a citizen, the first example is just the way life is.  Jim is rich, I’m not, the town has an immediate need, and, as my late father used to say “money comes to money.”  I don’t see either a political or moral dilemma.  The second example I find outrageous.  High-roller Jim buys a few politicians and, in return, gets a huge gift of public assets that could have been used for roads, schools, sanitation and cops.

My economist friend, however, in viewing it purely from a professional perspective, didn’t agree.  Even a corrupt bargain was not, in and of itself, problematic. “So what? It's just a transfer. The city used to have the building, now the financier has it.  It doesn't change the level of output, just the distribution.”

As you might have expected, I reacted to this. I wondered if this was simply a public/private thing (and he was a good capitalist) so I reimagined the situation as my personal property company selling the building to Jim on the below market terms, after Jim bought a very expensive convertible for my supposedly loyal manager.  In an excess of understatement, I added I would be very irritated.

Again, while he understood the irritation, as a professional, he was unmoved: “Pareto improvement or loss. This is neither, it’s just redistribution.”  My problem was one of psychology and political science, not of numbers.

So, what do ostensibly soulless economists care about? “(T)he worst part of political influence by the rich is value destroying corruption.  For instance, suppose he's allowed to demolish the building and construct a 100-story condo where it doesn't belong. Then society as a whole is worse off--the benefit the developer derives is less than the social cost. It's Pareto loss.”

“Value-destroying corruption.”  Now we have a metaphor we can use.  He’s an economist.  I’m politically oriented.  From that perspective, I would argue that my friend, in claiming the politically motivated sweetheart deal doesn’t, per se, destroy value, may be missing something critical.  

Politics, by definition, creates winners and losers.  But governing shouldn’t be about reward and punishment.  We should expect those who lead us to improve things.  In short, if they are going to put their thumb on the scale in favor of one group, they should do no more than accomplish Pareto efficiency, and optimally, a Pareto Improvement.

Of course, that is (without the Pareto fetish) essentially what they claim they do.  When a Republican pushes for more for the wealthy, he couches it in terms of “job creation.”  Democrats speak more generally about redressing inequality, but the more sophisticated support better education, vocational training, and infrastructure which, in the long run, would give more people the ability to succeed, create and consume.  In effect, parties differ on approach but both are saying essentially the same thing, which roughly translates to “support my pals and it will be good for everyone.”

Except, we all “know” that’s a lie.  These folk really don’t care about everyone, they only care about those people who pull the lever for them, or, more importantly, write them a nice check. Knowledge of that dirty deal that the Mayor did with big-bucks Jim can induce a sort of lawlessness among the general population.  People don't report income, they barter, they pay cash to avoid sales tax, they cut corners.  Instead of fearing moral opprobrium and worse if they are caught, they feel stupid if they obey the rules while everyone else isn’t.  So, that $5M gift to Jim of public assets, even if it’s just at first “re-distribution” can be amplified by a thousand small acts of non-cooperation and become a Pareto Loss.

That process seems to be accelerating. One of the real dangers of this constant lurching back and forth between the parties, with wave elections suddenly installing single party-dominance, is that there’s a pent up demand for special favors.   That demand is being met by newly elected politicians taking care of theirs first and always, swiftly and often ruthlessly.

Yet, the spoils system isn’t new by any means.  What seems to have changed is something larger, yet harder to quantify.  It’s a sort of willfulness to take and a deafness to the legitimate concerns of others. 

You saw a hint of this on Tuesday, when Ralph Hall, the 91-year old Texas Congressman, was defeated in the Republican primary by Tea Party candidate John Ratcliffe. Hall’s sins basically boiled down to age and a (perceived) unseemly tendency to be a little too much of a gentlemen.  His leaving closes the door on an era; in January 2015, there will be no more WWII vets in Congress.

If you think that kicking the old coot out the door is something to celebrate, I would suggest you might be wrong.  Because what Hall takes with him is a little bit of the mindfulness that Milton Glaser was talking about last week.  The Greatest Generation had a consciousness that came from shared experience and often painful sacrifice.  Pols and partisans they surely were, but they were also open to other ideas and collaborative solutions.

I’m not an economist, but I feel pretty secure in saying that the passing of their way of thinking will lead to a Pareto Loss.  I don’t think I need to point out who will be the losers.

May 30, 2014

Michael Liss (Moderate Moderator)

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I'm Certain You Are Wrong

I'm Certain You Are Wrong

This past week I heard some brief remarks by Milton Glaser, the graphics designer who, in 2009, was awarded the National Medal of Arts. You have probably seen Glaser’s work a thousand times over without knowing it; among other things, he designed the “I Love New York” and Boston Brewery logos, and the iconographic image of Bob Dylan for Columbia Records.  When not drawing and designing things, he took time to be a Fulbright scholar and to co-found New York Magazine.  A rich life, still going strong at 85.

Glaser was talking about art.  What it is, and why it’s created, and what it can do for people.  Art, more than anything else, is a point of commonality between human beings.  I had never heard him speak before, so, after returning home, I dug a little deeper, and found an article from ForbesIndia.  Glaser has a world-view that had a particular resonance for me personally. As each week passes, and I write another post for Syncopated Politics, I have been grappling with my own concerns about what it is to be a self-identified moderate Democrat in the age of Obama.  Government, which I think can be part of a modality in delivering a decent life for those willing to participate fully, isn’t working.  It doesn’t matter whose fault it is; all the dysfunction has created a seething mass of angry constituents and poorly executed services.  Glaser’s commonality between human beings is disappearing.

We have a tendency to think about this split as a regional thing-North vs. South, the two coasts vs. the heartland, but it’s not that simple a narrative.  The Milwaukee Journal Sentinel has a truly fascinating story about one of the most politically polarized places in the United States—the Milwaukee Metropolitan area. 

In four counties, Waukesha, Washington, Ozaukee and Milwaukee, Republican Governor (and possible 2016 Presidential aspirant) Scott Walker has a 91% approval rating among Republicans, and Barack Obama a 93% approval rating among Democrats.  Obama’s approval with the GOP? 8%.  Walker’s with Democrats? 10%

How is that even possible, that people who live in such close proximity to each other could have such intense political differences expressed with such an astounding degree of unanimity?  The author, Craig Gilbert, speaks of “a rising political segregation here, from a fiercely fractured electorate to the loss of competition to almost intractable urban-suburban divisions to the evolution of two parties that attract different kinds of voters, represent different kinds of communities and win different kinds of elections.”

Mr. Gilbert could just have easily been speaking of the country as a whole.  There is no question that we have grown more estranged and nastier in our interactions.  You could see this vividly when the 9/11 Memorial opened in New York.  The comments in on-line forums and opinion columns were predominantly ugly accusations, defiling the memory of guiltless victims. People who profit from an open, filter-less mike deliberately stoke some of this crassness.  But much has just infused itself into the more vocal part of the electorate.  We have made a hobby of disdaining and sometimes even hating each other.   And we have made a virtue of willful ignorance of any fact that doesn’t fit our world-view.  We have become a nation of deniers. 

That has to leave us with a sense of unease and even dread.  You can find some of it echoed in David Brooks’ column in Tuesday’s New York Times.  “The events of the past several years have exposed democracy’s structural flaws. Democracies tend to have a tough time with long-range planning. Voters tend to want more government services than they are willing to pay for. The system of checks and balances can slide into paralysis, as more interest groups acquire veto power over legislation.”  Brooks goes on to ask, “Is democracy in long-run decline?”

Brooks’ solution is something I think he first learned at the feet of William F. Buckley: let the elites do it.  He wants Simpson-Bowles knock-offs where well-educated men and women get together (presumably over snifters of brandy) and discuss the great issues of the time and issue proclamations that, presumably, the rest of us respect and support implementation of. 

I’ve allowed myself that bit of snark to demonstrate two points.  The first is that Brooks is betraying a lack of trust in the general electorate that I find troubling, and, perhaps out of an unexpressed despair, he is drawing back from the communitarian conservatism that he has held as an ideal.  In short, he doesn’t really know what else to do. The second point should be obvious.  My snark is a substitute for any type of real solution.  I can tell you far better what the other side is doing wrong than how my side could do it better. 

It takes an artist to get to the point.  Glaser says “And so, we come to what I believe is useful in a kind of discussion like this, where you’re interested in the commonality of human beings: the suspension of belief. What people have to do is to stop believing and begin to observe. And the way I have been expressing that in relationship to art and design, is that attentiveness, in the Buddhist sense, becomes the way by which commonality, the observation of the real, is possible.”

That is a fascinating statement; stop believing and begin to observe.  Find the real.  Implicit in that is a sense that there is an objective truth that can be seen, if we only allow ourselves to see it.  To find commonality of purpose and approach, we have to discard our preconceptions.  “Once we come to life with an existing series of beliefs, the conception of commonality disappears. So, suspend ideology; suspend previous beliefs about what the world is. Attempt to experience it directly, by observation and attentiveness.”

Glaser isn’t talking about groupthink, or some state-imposed set of ideas.  What he is getting at is a sort of mindfulness, a persistent state of alertness and an openness to new information, even when it doesn’t fit into an ideology.  He sees it as an imperative; “I can’t imagine any other way to develop the sense that we are all in the same boat, experiencing the same needs and wants.”

How do we get life to imitate art, to think as if we were all in the same boat and experiencing the same needs?  

It would help if we had leaders who were courageous enough to both believe in, and repeat, Glaser’s words, “A certainty is a closing of the mind.”

May 20, 2014

Michael Liss  (Moderate Moderator)

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Benghazistein

Benghazistein

These are heady days for the GOP.  President Obama’s personal popularity and his job approval ratings are at low ebb.  The number of people who think the country is on the wrong track is double the number that thinks it is on the right track. The generic Congressional ballot shows Republicans with a lead portending a sweep of 2010 proportions.  At this moment, we can expect the GOP tighten their grip on the House and take the Senate.

Since it is all over for the Democrats except for the counting, the post-mortems, and the finger pointing, the Republicans have smartly turned their eyes towards 2015 and beyond.  My goodness will 2017 be fun!

Which, rather sadly, bring us back to the here and now.   Yes, the Democrats are going to get slaughtered in a few months.  And yes, on top of the endless policy disputes between Congress and the White House, that does mean that we will likely see impeachment proceedings in the House, and quite possibly a trial in the Senate, since many in the GOP will not be able to control themselves long enough to wait for salvation through the ballot.  But there’s eight awful months before they can really get going on that, and, there has to be something to distract them.

So, what to do for the rest of 2014?  You can block Obama’s appointees, but there’s only so much fun to be had with that.  You could try to repeal Obamacare, but a lot of juice has been squeezed from that lemon already.  You could lay out, in detail, what your plan is for America when you get in charge, but that would be ill advised, because then you might actually lose.

The base needs more.  Shoveling through the ashes of the perpetual denounce machine is really kind of dull.  Of course, everyone hates Obama-- at least the red-blooded non-taking native-born real Americans do, but if you are a party elder, you also know a scary little secret:  In 2016 Barack Obama will not be on the ballot.  Yes, you can campaign as if he was.  But he won’t be, and amidst all the measuring of the drapes, and the secret handshakes with your largest contributors, that is a very troubling fact.  Barack Obama might very well have brought new voters to the polls, but he also drove many others to vote against him, and more than a few of those were at least nominally Democrats.

I’m oversimplifying greatly, but there are basically two main types of Republicans these days.  The first includes the ones who have worked themselves into such frenzy over everything Obama that they embraced a world-view that sometimes seems out of touch with reality.  They actually believe the birther nonsense, the Saul Alinsky references, the Kenyan Muslim stuff and every wild conspiracy ginned up in every corner.  The second group sees Obama as a political problem.  They disagree with him on a philosophical level, they have (often quite legitimate) complaints about his performance, but what they really want is for one of theirs to be in charge.  Both groups might engage in the same tactics of obstruction and vituperation, but the truth is that most Republicans, even those in the gerrymandered House, are not in the least bit crazy.

You can see this shift over the last few months, as the outlines of the size of the potential Republican victory get clearer.  The sane people in the GOP don’t want to blow it.  Their spokespeople in the press are counseling calm, deliberate action.  Obstruct, criticize, condemn, etc. are all still useful tools, but the most important thing the GOP can possibly do is not kick it away.   So they are backing mainstream (very conservative, but supported by the party) candidates and incumbents against insurgent ultra-ideologues. 

There is a lot at stake for the GOP in the next two cycles.  Obama’s tepid performance and his personal issues give them the chance to hard wire control of Congress, and that means that no laws will be passed in the next couple of years without major concessions or outright capitulation from the Democrats.  And 2016 gives them the chance of a generation—to usher in a new wave of top-to-bottom conservatism.  There is also the money issue.  They will always have people like the ideologically and economically motivated Koch brothers, but the rest of their corporate backers from organizations like ALEC and the Fortune 500 set to the US Chamber of Commerce invest money for a return.  They expect results, and results can only come from winning.  Businesses will not perpetually throw good money after bad.

Still, one of the GOP’s biggest assets in the midterms, where turnout is always lower, is the passion of their shock troops.  That is very hard to manage, because you have to keep the pressure-cooker perking without having the top blow off.

There are two aspects to this, both institutionally and individually. The first is making sure you are right wing enough to keep control (or your job) from the farther right.  But the second, if you really have aspirations for high office in any place that isn’t deep Red, is to stay away from the fringe and the stupid.   That’s a high wire act, as Marco Rubio showed this past weekend, when he graded Hillary Clinton’s Secretary of State tenure an “F” (perfectly acceptable partisan commentary) and then plunged, unnecessarily, into the climate-change denial ritual baths. 

Fringy/stupid can cost.  Polling shows that on most issues, the public favors the Democrats but thinks them less than fully competent.  For the GOP to sweep the next two elections, they need to show they are able to govern competently and rationally.  And they need to keep those disaffected Democrats who weren’t going to vote for Barack Obama but might very well vote for a more conventional Democrat, such as Hillary Clinton or even Joe Biden.   

Blessedly, Judicial Watch, an ultra-right wing policy group that bills itself as non-partisan has come to the rescue.  They have uncovered, through a FOIA request, a White House email on Benghazi that appeared to show that the Administration was concerned about how to put the best face on the disaster.

Christmas arrived early for the GOP: the Benghazistein monster just got reanimated. And what makes this even better is that deep in the Libyan doo-doo is none other than Hillary Clinton.  The Ghosts of Presidents Past and Future. 

Swiftly, Speaker Boehner announced yet another investigation, to be headed by South Carolina Congressman Trey Gowdy.  Just as swiftly, the GOP has started to fundraise, showing, once again, that the best way to make money is by using taxpayer cash as seed-corn.  And, in lockstep, conservative commentators and Fox have been running round the clock coverage rivaling CNN’s on Flight 370. 

The Democrats really don’t know what to do.  There have already been over a dozen investigations into Benghazi.  Many Democrats don’t want to participate at all and are suggesting a boycott, a particularly dumb response, in my opinion, because someone has to be in the room.

What really happened there?  I am not going to pretend I know.  What I think might have occurred was an intelligence failure, a slow reaction, perhaps based on the poor intelligence, perhaps because of poor judgment, and a White House that did a little spinning.  There have been a lot of Americans that have died overseas under Presidents of both parties, and a lot of spinning that followed those deaths, and none of those past incidences have given rise to anything like Benghazistein.

But I’m not really sure, and I wonder who is and from where they are getting their information.  Appointing another committee of hanging judges isn’t going to get to the truth, and Gowdy, on Fox News (of course) has already shown in inclinations.  This will be, as he indicated before correcting himself, a prosecution, not an investigation.

Good for the Party? Probably yes, in the short term.  The lads over on the Tea Party side of the table will have a chance to work off a little energy, the money will flow in, and the White House and Hillary will certainly be embarrassed.  Longer term, I have doubts, if for no other reason than I don’t believe that Gowdy and his allies will really be able to maintain any sense of due process or dignity.

That’s the real danger of Benghazistein, for both parties.  Once the monster is loose, it will careen out of control, churning up plenty of mud, but very little clarity.

Really bad for the brand.  Both brands.

They deserve it.

March 12, 2014

Michael Liss (Moderate Moderator)

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Justice Thomas Make a Leap of Faith

Justice Thomas Makes a Leap of Faith

Let’s begin with a proposition.  New York City, sleek, slick, liberal, atheistic capital of hedonism, suddenly has an epiphany, and gets religion.  At long last, Staten Island finally opens its arms to its heathen brethren.  Everywhere pockets of devoutness spout up, from the formerly libertine Greenwich Village to the softheaded Upper West Side,  the hip sections of Brooklyn, all of Flushing (the Mets are in particular need of Divine help) and Riverdale in the Bronx.  From there the pull of faith begins to spread, and there comes a time that it is so great that even the ACLU is forced to close up shop and move to Oklahoma.

The conversion is not complete, because the pure contrariness of New York DNA keeps an irreducible, un-saveable 40% from seeing the light, but thanks to some savvy gerrymandering, everywhere the seculars are outnumbered.  The devout then turn their eyes to their alternate religion, politics, and take over every arm of government, every community council.

But, there is a problem with all this purging of sin and seizing of power. New Yorkers are a diverse lot.  The Catholics have an absolute majority in four of the five  boroughs among the self-identified, but, since that constitutes only about 60% of the population, they can’t run things on their own.  So, they cut deals with the Protestants and the Jews, where necessary.  Everywhere, there is a division of labor and power, and everywhere, at every governmental meeting of every type, large to small, they open with a twenty-minute religious service.

Crazy story, right?  Certainly, the courts, when alerted, will put them right?  That is where the Supreme Court’s decision, this last Monday, in Town of Greece vs. Galloway comes into play. In a 5-4 ruling (is there any other kind?) the Court held that a) some legislative prayers are Constitutionally permissible, and b) prayers that have specific religious content or have theological content specific to one faith (such as Christ or the Resurrection) are also permissible. 

The decision of the Court, written by swing vote Justice Kennedy, and joined by the conservative bloc, was fascinating in its delicacy.  Justice Kennedy said, "Our tradition assumes that adult citizens, firm in their own beliefs, can tolerate and perhaps appreciate a ceremonial prayer delivered by a person of a different faith.”  The decision implies but does not draw a line that prayers that denigrate or otherwise belittle other faiths might not be permissible, but it does express a certain noblesse oblige that the prayer any of the Justices in the majority might find on a Sunday morning in their place of worship should surely be acceptable to everyone.

The minority opinion (Justice Kagan, joined by Justices Sotomayor, Ginsburg, and Breyer, who wrote a separate dissenting opinion) found the majority’s ruling unpersuasive.  While they recognized existing precedent that a little non-sectarian praying before legislating could be Constitutional, they thought that the medium-sized town of Greece (population, 94,000) seemed to be leaning quite assertively away from the merely ceremonial.  Since 1999, when a new Town Supervisor was elected, Greece had moved from a moment of silence to prayers led exclusively by members of the Christian clergy.  Greece did not overtly select the clergy, nor did it either dictate or limit what types of prayers were uttered, but, as you might imagine, some clergy brought more passion than others. 

What the minority was worried about was impact of overtly religious symbols in a civic setting.  Would a non-Christian citizen, upon attending a public meeting, feel that her chance of fully participating in the governance of their town was limited because of her faith? 

That is hard to say.  One of the examples that Justice Kennedy cited and presumably found acceptable was “We look with anticipation to the celebration of Holy Week and Easter. It is in the solemn events of next week that we find the very heart and center of our Christian faith. We acknowledge the saving sacrifice of Jesus Christ on the cross. We draw strength, vitality, and confidence from his resurrection at Easter.”   That is a little stronger than the 23^rd Psalm.

Practically, and not necessarily as a matter of law, I think both Kennedy and Kagan got it half right. A short prayer, even one not in my liturgy, and assuming I am not compelled to join in, doesn’t offend my sensibilities.  I am not convinced, given the long history of legislative ceremonial prayer, that it is per se a gateway drug to theocracy.

But, clearly, there is some line.  What Kagan and Kennedy are both doing, whether they articulate it that way or not, is applying a “hall monitor” strategy.  Kagan, in effect, is saying that the language I just quoted above is the very type of thing a hall monitor would flag.  Kennedy (and Scalia, in a concurring opinion) think that the children really don’t need a hall monitor, a little religion won’t hurt them, and if the offense is really bad (egregiously sectarian to the point of interfering with civic life) then someone will rat out the teacher to the Principal (the courts) and the proper limits would be imposed.

There is logic in both positions. The portion of the First Amendment that deals with religion states “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof...” Traditionally, we have thought of the Establishment and Free Exercise Clauses as a type of macro rule.  Government can neither promote nor prefer one religion to another, nor can it prohibit anyone from exercising his or her religious rights.  To most people, that makes sense.  The skirmishes we have had have often been where the invisible line was crossed, such as putting a crèche in a public square, or in organized prayer in schools.  But the basic idea, that Big Government shouldn’t be putting its thumb on the theological scale, is intuitively logical and fair to most Americans.

What Kennedy’s and Kagan’s opinions represent is within the continuum of that debate—just where is the red line? For both, it remains peculiarly fact-specific and their opinions are oddly analogous to the famous Justice Potter Stewart test for obscenity “I know it when I see it.” So, in that light, Greece is somewhat human and comforting, even if I don’t completely agree with the result.  They did the best they could, while applying their own personal standards.

If that was where it ended, I think I would be somewhat dissatisfied, but content.  Then I read the concurring opinion of Justice Thomas.  Thomas, on his own, repeated his contention that the Establishment Clause should not be seen as incorporated by the Fourteenth Amendment against the States.  In his view, “Congress shall make no law” means only Congress shall make no law.  State and local governments are not so limited, and are free to promote, support (or, presumably interfere with) the exercise of religion.  Thomas allows that the Establishment Clause “probably” prohibits Congress from establishing a national religion. Parenthetically, the “probably” part is enough to chill one a bit.  But as to establishing a State (or city, or county, or town, or hamlet) religion, the sky is apparently the limit. 

Not to draw the logical conclusion, but if you can do it in Greece, New York, you can certainly do it in New York, New York.  Size doesn’t matter.

Justice Thomas is reportedly a man of faith.  But his opinion in Greece?  That’s a leap of faith.

May 6, 2014

Michael Liss (Moderate Moderator)

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