Perfectly Good Ink

debugging

comments aren't working

can IntenseDebate support

figure out what's wrong?

The Economics Behind the Individual Mandate

In regards to the big Supreme Court decision on RomneycareObamacare, there's been much hand-wringing on how this is a tax on doing nothing. This does seem odd, until you realize that a penalty or tax on one group but not on a second group is economically identical to having no penalty or tax on the first group but a tax credit or a subsidy for the second. Either way, it's a transfer payment from the first group to the second group. Economist N. Gregory Mankiw made this point a few years ago:

...consider two proposals:

1. A person is required to have health insurance. If a person is in violation, he pays a $1000 fine. The revenue from the fines is rebated lump-sum to all taxpayers.
2. A person is not required to have health insurance, but those with health insurance receive a $1000  tax credit. The cost of the tax credit is financed with a lump-sum tax on all tax payers.

Notice that there is no economic difference between these two scenarios. The difference is purely semantic.

A subsidy or tax credit for a certain activity, such as buying a house, getting married, having children, and growing certain crops, is economically equivalent to a tax on inactivity. The mortgage deduction can just as easily be labeled a renter's penalty or tax. So while it irks me that Obama wasn't more up-front with the mandate actually being a tax, it's economically identical to a tax credit for those who purchase health insurance (much like Paul Ryan's plan).

Now generally I oppose most such transfers because they are often thinly-veiled kickbacks resulting from corporate lobbying for artificially high profits (economists call this "rent-seeking"), but while there's plenty of rent-seeking fingerprints on Obamacare, the health insurance mandate tax is a little bit different. Here's why.

(Re)start Me Up

Hey all y'all,

Well, life is strange. Five years ago, I was a software engineer in the Silicon Valley, taking economics classes to transition to a new career that, at the time, I thought would be public policy. A summer in D.C. and a couple of trips to Burning Man, and well, that plan went up in flames. So I holed up for a while to do some soul-searching, and then the economy went down in flames around me.

After a tour in the desert for Black Rock City's DPW, things started making sense again. After teaching economics for a couple of semesters at San Jose State, things crystalized a little bit more. And then after meeting the woman who would become my wife during Playa Restoration, the world opened up again. We road-tripped across America, did another tour at DPW, got married during SF Decompression, settled in Austin, got married yet again in New Hampshire, and then had a son who has epically shattered cuteness records across the galaxy.

Things were still rocky there for a bit, but then I found a job in educational technology. As I said, life is strange. Heck, this city even has a Formula One race coming up.

Anyhow, now that life has settled down a bit, the writing calls back to me (the unbeknownst-Texan-in-me is also calling out for me to become an Asian redneck, but that's neither here nor there). You probably didn't notice over there on the right that I've started commenting more regularly in the blogosphere again. Well, expect more of that, only a bit longer (but not as long as I did way back when).

So y'all come back now, y'hear?

The Bucket List meme

Things you have done during your lifetime:

(X) Gone on a blind date
( ) Gone on a date with someone who was blind
(X) Gone on a date with someone who was blind and you stole food off their plate
( ) Gone on a date blind because there was a bucket over your head
(X) Had a date so ugly you wish there was a bucket over their head
(X) Been stood up by a bucket
( ) Seen Buckethead in concert
( ) Tried to bring a date to a Buckethead concert
(X) Brought a bucket as your date to a Buckethead concert

/ within this post lies / a plea to a criminal / (in haiku format!) / #haiku

for shame, ray lewis!
sheesh, there just ain't no justice.
murderer you are!

(or accessory)
you kept changing your story,
and broke your promise,

yet got off scot free!
your bad karma hurt your team,
and many team-"mates."

(NO, I wouldn't want
you on the Giants any
more than Plaxico!

yeah, LT did drugs,
but that's a victimless crime,
and murder is not.)

please come clean now so
the victims' families can
at last enjoy peace.

there! i spoke my piece.
my thoughts are with McGahee.
lift away his curse!

(ravens fans, for shame!
worse than giants fans who gave
barry a free pass.)

The facts were these:

Taking turns

brady-fail, by stallio on Flickr

Sometimes, I have to wonder what our society would look like without sports. Last year's New England Patriots finished the regular season an unprecedented 16-0, and they were heavy favorites in the Superbowl to be the first team to complete a perfect season since the 1972 Miami Dolphins (whose perfect season had a shorter schedule back then). But those New York football Giants made mince-meat out of this tantalizing possibility, and so the Patriots are remembered more for what they could have been than what they achieved. Making the Superbowl a close dramatic contest was good for the sport, but the Patriots did not get rewarded with 40% of the championship or even 20% of the championship. No, they got absolutely zero percent. And I'm no whining Patriots fan. I'm actually a long-time Giants fan with a Rodney Hampton jersey (and as much as I liked Tiki Barber, this team only looks itself with a big smash-mouth bowl-them-over running back like Hampton or Jacobs).

Such is the nature of sports, where large stakes and drastic swings provide potent fuel for dramatic comebacks and big plays that sear themselves into our collective consciousness (I have to believe that even non-Giants fans will remember Eli Manning's pass to David Tyree). Fans and athletes live for this stuff, and all-or-nothing outcomes make perfect sense for an industry whose purpose is to entertain. High stakes make for great drama, and everybody hates to see such dramatic contests end in ties (which is exactly why hockey moved to the shootout, why you can expect football fans to whine about that Eagles-Bengals game, and why no sport allows a championship game to end up in a tie -- kinda like action movies).

I'm clearly a sports fan myself, but I think our society is not very well served when this win-or-lose attitude is forced upon young kids. When kids are left to their own devices, they usually play games without winners and losers. Games where the object is to merely to take turns doing a variety of fun activities, like tag, hide and seek, and duck duck goose. Heck, when I was a kid, we played a game that we called "throw up and kill." No, it didn't involve vomit, it involved throwing a football in the air, and then everybody would try to kill (tackle) whomever caught it. When tackled, they'd throw the ball up, and the game would resume again (and I will insist that "throw up and kill" is a funnier and more descriptive name than "smear the queer," and every bit as memorable). Note that the object of these games is not to crown a champion, but just for everybody to have fun (we also played football, but throw up and kill was much more fun and we played it more often). This is the important point. Games don't have to be contests. I think it's really the hockey dad and soccer mom types who force the kids into organized sports which most kids probably do not prefer.

With this win-or-lose mindset ingrained as a kid, adults often mistakenly apply this to other areas of life.

A case where a counterargument had already written itself

Glen Whitman points out a defense of the Electoral College from Don Boudreaux:

A related, but potentially more serious, objection to the Electoral College...is that it can result in a minority of popular voters getting the candidate of their choice over the candidate receiving the greatest number of popular votes. ... This objection, too, is weakened when one considers that such outcomes can occur in legislatures based upon geographical representation where there is uneven distribution of the voting population across the electoral districts.

Whitman goes on to explain:

Or in other words, people who have a problem with the Electoral College should have a problem with the Senate as well. In fact, they should have a bigger problem with the Senate, since it diverges much further from proportional representation than does the Electoral College.

Damn. I don't know what to say about that -- except I must've seen this coming, because my previous post happens to support both ending the Electoral College and implementing Proportional Representation for Congress. And I do, in fact, prioritize the latter, as it will result in more political representation for libertarians, and future posts should make this evident (and no, I honestly hadn't seen Whitman's nor Boudreaux's post until today).

All I have to say is that this seeming coincidence is just seriously trippy -- until you consider what Whitman says here:

You can get the very same effect -- i.e., policies being adopted with only minority support -- when electoral districts represent equal-sized groups of constituents, as long as the groups have sufficiently different divisions of opinion.

Of course, this is exactly one of the problems I wanted to solve when proposing Proportional Representation. Because, you see, the root problem in both is the distortion of the electorate's wishes by using winner-take-all in single-seat districts. As I pointed out earlier, this system discards the very useful and relevant information about the margin of support (or "divisions of opinion", as he puts it), information that is captured under Proportional Representation.

So I'd say Boudreaux actually strengthens my case.

What true change would look like

Obama promises change, but I am doubtful. Over the years, we've had a lot of politicians making lots of promises. While they do tend to deliver some changes, they are always orders of magnitude less than what was promised. After all, politicians have incentives to tell voters what they want to hear but few incentives to deliver upon what they say (being the lesser of two evils is a pretty low bar). For that matter, they won an election in the current system and current set of rules. True change -- change that actually moves us away from the status quo -- would involve changing changing the rules. Why would somebody who won under the current rules ever want to change them? As Dr. Horrible says, the status is NOT quo.

Anyway, I make no secret of the fact that I think our political system is pretty screwed up, which is a major reason I'm a libertarian. Sure, the result in this presidential election might not seem so bad, but it only happened because the results from the last two were so disastrous (and even this year, Ted Stevens is winning). In an ideal world, we'd have a government made up of officials who have the best interests of their constituents in mind instead of their own. That's just never going to happen, so we could at least have a political system that aligns the incentives of our officials as closely with that of the electorate as much as possible. This is the overriding goal and sole purpose for the existence of democracy, after all.

So I have four reforms I think we should institute that would improve our political process. Well, I have a lot more than four, but as we've just had an election, I figure I'll stick to ones that are completely non-partisan in nature and not tied to any specific political philosophy or ideology beyond democracy and fairness and efficiency. They also take some time to explain, so I'll cover the first two today (which both cover voting and elections, so are thus quite topical and timely!) and cover the next two hopefully next week.

This Damned Election

Eight years ago, I didn't really have a strong feeling either way between Bush and Gore. I didn't like either of them, although I told a friend of mine -- one that I would categorize as a Rush Limbaugh Republican -- that I feared Bush would be bad for both the country and the Republican party. Perhaps not too unusual except when you take into account that I'm a registered Republican (albeit a libertarian that votes for Libertarian Party candidates more often than Republicans and mostly just wants a say in the Republican Primaries).

Four years ago, I came out very strongly against Bush. Indeed, that post was one of the main things I had wanted to get out there when I started that blog, and I lost a lot of my motivation to write afterwards. I mean, it's pretty depressing that the country ignored everything us Bush critics were saying (especially us conservatives) until after Hurricane Katrina happened and they could finally see on television what we'd been saying all along.

This year, as is typical, neither candidate is particularly libertarian. However, I don't really sense too much of a difference in competence between the two candidates, and I think either of them would be a significant improvement over Bush.

Now you see it...

Yeah, I'm back from Burning Man. There was a bit of an adventure.

I'd been drifting aimlessly for the past few months, so one of my hopes in returning to Burning Man was to find some direction. Since I didn't have to get back by any strict deadline, my cousin Rich suggested I stay late. I'm not exactly a grizzled veteran of the playa, only having been once before for a few days, so I didn't consider myself particularly good at radical self-reliance. So staying after all my campmates had left was a rather daunting thought, and I was particularly worried about getting lost and/or stranded.