Tax and Deregulate

To offer some further thoughts on Iceland, I should say I don't particularly disagree with Will Wilkinson and others who think that the economic success of countries like Iceland and Denmark should be chalked up in part to the relatively light hand of the regulatory state in those places. In many respects, generous spending on public services and deregulation go together like a horse and carriage -- a lightly-regulated market economy generates the wealth that facilitates the social spending, and the availability of public services makes the vicissitudes of the marketplace much more tolerable.

When people are counting on their job to provide them with such a high proportion of what they need to get by in life (not in an objective subsistence sense, but in an intersubjective social sense) the risk of losing that becomes intolerable, and rises the demand to treat one's relationship to other market actors as an entitlement. Thus, labor market rigidities, price controls, subsidies, etc. Alternatively, one could simply be entitled to a basket of publicly provided stuff (education for oneself and one's kids, safe and well-maintained streets, adequate health care and transit, continuing education and job placement, etc., etc., etc.) but then let the ups-and-downs of economic life operate as they will.

The movement, started under Jimmy Carter then of course continued by Ronald Reagan and Bill Clinton, to deregulate important aspects of the American economy was basically a good thing in my view. Indeed, as I've blogged before there are a lot of areas -- especially at this point those under the purview of state and local governments -- where we would do well to deregulate substantially further in terms of occupational licensing, land use, what's involved in starting a new business, etc. Unfortunately, what we haven't done is built the strong welfare state and generous public services to go along with it. Here I part ways with a lot of people (Will, for example) who appear to believe that it's impossible to do in a large, diverse country what's been done in several small, homogenous countries. More challenging politically? Of course. And that's why we don't have it today. But doable? Hopefully some day in my lifetime? I think so.

Photo by me, available under a Creative Commons license

Comments

I agree with all of that, but you continue to ignore the main point about Iceland's taxes: it's not the level of taxation that Iceland has, it's the type of taxation. If the US switched to consumption-based taxes like the VAT and a flat income tax as its principal sources of revenue, the economy would be a lot stronger.

Posted by right | February 24, 2008 12:48 PM

These are nothing but warmed over DLCism. There are a great many in this party that despise everything Matt Yglesias is suggesting here. It is responsible for murdering our pets, poisoning our children, and getting Thousands of workers killed due to safety hazaards every day. I'm sure Matt Yglesias, who has never had to work a real job in his life and who has never had to live with anything but the best possible purchased goods, doesn't have a fucking clue how damaging deregulation has been to our society and our families.

If this is what we wanted, Hillary Clinton would be winning the Democratic Primary right now. We don't want this.

Posted by Soullite | February 24, 2008 1:02 PM

Matt,
What are your thoughts about the impact of deregulation on the environment? I know environmental issues are not a primary focus of your blog but surely you've thought about the increase in pollution due to deregulation and it's myriad costs to the individual, society, and marketplace (not to mention the damage to the intrinsically valuable environment and wildlife).

Posted by Laura | February 24, 2008 1:02 PM

I hate to tell Matt, but if this is all the Democratic party has to offer, their moment in the sun will be breif at best.

Those millions pouring out to vote for Democrats right now aren't doing so to get more NAFTA's and more deregulation. If thats what they have to offer, the American people will just hand the country back over to Republicans. This is corruption meant ot fill the pockets of men of Yglesias's class, and his laments that he's sorry he hasn't been able to get anything done for his lessers is disgusting.

Posted by Soullite | February 24, 2008 1:06 PM

It is simply absurd to continue the Reaganite memes about "regulations" with regard to quantity.

Is it somehow an improvement in "regulation" that Reagan slashed the number and scope of poultry processing inspectors, and that corrupt politicians of both parties paid off generously through donations from industrial pork producers kept up the dodge?

Did this somehow contribute in a salutory fashion to "the market"?

Is this some market advantage we simply must possess in the United States by having inferior meat processing standards and inspection and enforcement to them danged over-regyoolayted Western European governments?

Were sane people crying out for our banking regulations to be weakened so that we could lose the entire Savings & Loan industry? This $200 to $500 BILLION DOLLAR LOSS was somehow necessary for us to feel we were "less regulated"?

What an inane way to pursue this discussion.

Posted by El Cid | February 24, 2008 1:06 PM

The main problem selling a Scandinavian-style welfare state here is that Americans know it won't be competent Scandinavians administering it but the sort of surly affirmative action hires one sees working for the newest federal workforce, the TSA.

The other problem is that the benefits of this system will disproportionately go to members of under-achieving ethnic groups, while the costs will be borne disproportionately by members of high-achieving groups. This will breed resentment and make the system unsustainable politically.

"I agree with all of that, but you continue to ignore the main point about Iceland's taxes: it's not the level of taxation that Iceland has, it's the type of taxation. If the US switched to consumption-based taxes like the VAT and a flat income tax as its principal sources of revenue, the economy would be a lot stronger."

Great point. Maybe Matt will discuss this.

Posted by Fred | February 24, 2008 1:23 PM

What a bunch of nonsense.

Posted by abb1 | February 24, 2008 1:27 PM

I did not read all your posts about Iceland, but I think no discussion of Iceland's economic strength should be made without noting that they are in a very special situation. This is a country with plenty of clean, free energy and unlimited space. This doesn't guarantee a strong economy, but it helps.

When it comes to Denmark, I think you are wrong to claim that they have few regulations. They have strong regulations regarding the environment and health standards. The major differences to other European Countries is the flexible labor market. Here your argument is valid. The combination of strong welfare state and flexible labor market (the so called flexicurity model) seems to have a very positive impact.

Posted by rz | February 24, 2008 1:29 PM

The big problem with all of this is that it's the same lie the DLC has been peddling for 2 decades now, not affirmative actions hires. Though your Racism is an obvious argument as to why Matt must know full well his little formulation will never work.

The (vague) hopes Matt expresses at the end are the exact same lies that his ideological fore bearers told us when they sold NAFTA in the first place. They didn't intend to go through with them then (they clearly prioritized NAFTA before UHC), and Matt knows full well he never has any intention of spending 1/100th the energy fighting for a social safety net that he intends to expand fighting for 'free trade'. These people have lied to uss enough already.

We'll go back to protectionism long before we ever start taking care of the poor. Thats why those of us who oppose trade policies fight for protectionism. You all like to pretend that we can't turn the clock back, but the reality is we can. There is nothing magical to the policies Matt and his ilk have instituted over the objections of the American people. They can be reversed by anyone with the will to do so. Their attempts to pretend otherwise are merely shrieks and howls of the corrupt meant to prevent reform.

Posted by Soullite | February 24, 2008 1:32 PM

I do not think that the wealth of Denmark can be explained by free trade policies and I am not sure if Mr. Yglesias intended to say so. Denmark is part of a large free trade zone, the European Union. But this is a Union of economically more or less equally developed countries. To the outside the EU takes a common stance on trade which is protectionist.

Actually I think Iceland is also part of the common market of the EU, and has therefore the same restrictions on trade. But I am not sure about that.

Posted by rz | February 24, 2008 1:47 PM

Fred:

"surly affirmative action hires one sees working for the newest federal workforce, the TSA"

I'll ignore the thinly-veiled racism here, and just say:

When TSA took over airport security, I was first in line ready to denounce the storm troopers at the gates.

But I wasn't the only one that noticed how the customer experience going through security got *way better*--like, immediately. Faster. More courteous. Maybe more effective, I doanno, but it seems that way compared to the lackadaisical "whatevuh" feeling you got pre-TSA.

Spin that whatever way you wish. But I think there's a fact here: a huge majority of frequent travelers would agree wholeheartedly that TSA made things better. Anybody seen any real data out there on whether that's true?

Posted by Steve Roth | February 24, 2008 1:48 PM

This post is weird. Matt uses "deregulation" to refer to two unrelated issues, and he does so in order to heap undeserved praise on Ronald frickin' Reagan. I'm with soullite - this post demonstrates exactly how profoundly the neoliberal "consensus" has polluted our supposed center-left commentariat.

What Matt means by "deregulate" in terms of the Wilkinson / Iceland debate is the deregulation of the labor market. The loosening of national laws around hiring and firing practices is the basic issue.

The trend of "deregulation" in America has nothing to do with national laws on hiring and firing because basically none ever existed. What Reagan did was crack down on union organizing, and the rights of unions to fight for benefits and grievance rights - unions in Scandinavia do this, they have not been "deregulated". Reagan also "deregulated" safety restrictions and weakened the ability of government to manage corporate excess, to the great benefit of corporate profits, not workers' situations.

But since the word "deregulation" can be used for both, one can disingenuously link the Ronald Reagan to Icelandic social democracy.

Posted by DivGuy | February 24, 2008 1:53 PM

I guess there are good regulations and bad. Before Ronald Reagan relaxed cleanliness regulations on the meat packing industry, I always liked hamburgers cooked medium-rare; lots of people preferred rare. But now our ground beef is too filthy, so it has to be cooked medium-well. I think it's just great that someone has made more money; but I'd rather we had clean food again.

Posted by Gary Sugar | February 24, 2008 1:58 PM

"The movement, started under Jimmy Carter then of course continued by Ronald Reagan and Bill Clinton, to deregulate important aspects of the American economy was basically a good thing in my view."

Why? Like other commentors, I find this bland statement flabbergasting. In those instances in which regulation did harm, certainly changing it - or even negating it - is a good idea. But, broadly, deregulation being a "good thing" seems as nonsensical as saying - "putting things in your mouth is basically a good thing." Well, it all depends on circumstances.
You are making a concession way too far to the wacky right. Looking back, the people who benefit from the wave of deregulation are generally found in the top 2 percent income bracket. And perhaps they've generated good time for the next 20 percent group down. But the vast majority of Americans have suffered from the collapse of the regulatory New Deal State.

Posted by roger | February 24, 2008 1:58 PM

"The movement, started under Jimmy Carter then of course continued by Ronald Reagan and Bill Clinton, to deregulate important aspects of the American economy was basically a good thing in my view."

The S&L deregulation alone cost the US taxpayer 150 billion.

Posted by ~~~~ | February 24, 2008 2:14 PM

"The movement, started under Jimmy Carter then of course continued by Ronald Reagan and Bill Clinton, to deregulate important aspects of the American economy was basically a good thing in my view."

Or do you mean the deregulation of California's energy market?

Posted by ~~~~ | February 24, 2008 2:16 PM

Perhaps he's referring to the deregulation of credit card companies or housing loans.

The deregulation of union-busting. The deregulation of health insurance companies, that surely hasn't hurt anyone. It's been great for The Economy!

But, please, tell us how these are weighed to the benefit of actual people? Don't tell me about "the economy" as if it's some unitary thing that can be measured in a single effort - as Ezra Klein likes to quote, we live in a society, not an economy. What exact aspects of Reaganite deregulation benefitted people, and what aspects were harmful? How do you weigh the two?

Posted by DivGuy | February 24, 2008 2:22 PM

Roger, what golden age exactly are you using as the basis for your claim that the "vast majority of americans" are worse off now?

The Nixon era wage and price controls?

LBJ?

In real terms, the economy is cooking along as well as it has at any time but the nineties (when the DLC was firmly in control of the nation's eonomic policy). Unemployment is at historic lows. Wages, even for the bottom quintile, are higher than they've ever been, and if you include benefits (as you should) have been growing at a respectable 2% annually. Hell, even the environment is in better shape now than at any time in the past 50 years. Read the EPA's particulate counts if you don't believe me. And this is after 7 years of Bush.

The only economic trouble that we have more of today than in the past is inequality. And I, for one, am not willing to throw out 30 years of economic success because excessive CEO salaries offend your egalitarian sensibilities.

Posted by heedless | February 24, 2008 2:26 PM

In real terms, the economy is cooking along as well as it has at any time but the nineties

Insofar as this is correct, this is among the best evidence that exists for the moral and intellectual vacuity of the notion of "the economy".

But, hey, the Conehead Economy shows growth on average. What sort of person would ask what effects it has on the ground, and what sort of suffering is actually going on? Empirical work? That's all been dealt with in our models!

Posted by DivGuy | February 24, 2008 2:31 PM

I think this is an interesting discussion. But I do also agree with some of the posts above (especially Laura and DivGuy) that want more detail about the nature of the deregulation Matt and Will are talking about. What are the primary remaining areas of problematic regulation in the US? Antitrust? Union-related? OSHA stuff? Environmental? Affirmative action?

To be fair, Matt is actually a bit more specific than Will (go read Will's post if you want to get angry at the long shadow of the DLC). Matt specifies occupational licensing, land use (I think he's thinking of zoning more than e.g. wetlands), and "what's involved in starting a new business."

I don't know much about the first and the last of those three. But I can say that Matt's concerns with DC retail zoning are a bit different from the form zoning takes where I live, in a small city in Illinois. Here zoning is pretty lax, and as a result we get enormous inefficiencies of sprawl. We could really use slightly more aggressive zoning to encourage infill and higher-density residential development.

Posted by Ted | February 24, 2008 2:36 PM

In this environment, deregulation is NOT a good idea, because it is a gift that, even if honestly given, cannot be honestly received.

American business consists entirely of men who are emotionally fixated on being placed above the law. (Anyone with higher standards has long since fled in disgust.) They cannot interpret deregulation as anything other than a grant of unaccountability.

In order to dispel the habit of unaccountability, a regulatory regime must be put in place with much tighter enforcement and much graver penalties than have ever been attempted before. This will cause a very severe depression, but so it must be.

We must face up to the fact that most of our ecomonic activity is corrupt and that an honest economy would be much smaller than the one we "have" now.

Posted by Frank Wilhoit | February 24, 2008 2:39 PM

Heedless, the national economy isn't the well-being of most people. In a system with this much inequality (which matt has admitted several times he could care less about), the GDP becomes nothing more than a measure of how well the ruling class is doing.

In reality, most americans haven't seen a raise above inflation for 3 decades. Most americans can't afford homes. Most Americans can't afford to send their kids to college. Perhaps things haven't gotten worse, but things haven't gotten better for most people either. Over a 3 decade time period, that is just unacceptable. At the same time, for a very narrow elite, life is a thousand times better today than it was 30 years ago. That is unacceptable.

Posted by Soullite | February 24, 2008 2:45 PM

I think Matt's too young to have flown an American airline before deregulation turned the airlines into glorified cattle calls for all but the wealthy. Remember, folks, didn't he tell us he voted for Romney? I'd say anyone who bought what Romney was selling when he ran for governor was either a rightwinger, prejudiced against having a female governor, or (my bet on Matt) wet behind the ears politically. Give him time. Carter's probably his idea of a real liberal Democrat. Bowing down to the market is probably part of the culture picked up by osmosis in his time.

Posted by skeptica | February 24, 2008 2:53 PM

Read this and weep, sucker, Matt understands Obama much better than you do. Praising Ronald Reagan and deregulation will be a DC job requirement for the next 8 years.

Posted by bob mcmanus | February 24, 2008 2:54 PM

Praising Ronald Reagan and deregulation will be a DC job requirement for the next 8 years.

Well, it has been a DC job requirement for the last 28-32 years, too. This isn't new.

I thought there was a possibility for structural change in this election, but with it gone, I think the left needs to be pragmatic.

Incrementalism and meliorism is still superior to imperialism and unrestrained corporatism. Hopefully some incremental successes will bring about a better situational for structural change, and even if they don't, relative success in the relieving of suffering is still a good thing.

Posted by DivGuy | February 24, 2008 3:03 PM

I can't speak for Matt, but the a few specific successes of deregulation spring to mind:

Airline deregulation - Means that even low income families can afford to fly every once in a while.

Telecom deregulation - You no longer need to take out a second mortgage in order to call Florida. This was also quite important in allowing the internet to grow.

Axing the fairness doctrine - TV news is still stupid and boring, but not as boring as it used to be, partially thanks to this change. (It's still pretty dumb, though) Also, the law was a blatant violation of the First Amendment.

Banking deregulation - This is a bit more controversial, but I think it stands on the merits. When it was done well, it allowed banks to innovate, making credit easier to come by. This is why every American with a job, and most without, can get a credit card. Less frivolously, it also made mortgages (and home ownership) a lot more widely available.

When it was done badly, you got the savings and lone debacle. I blame this more on corruption than on deregulation per se . (Read up on Sen. Jake Garn and Congressman Fernand St. Germain if you are in need of an emetic) The last Energy Bill was quite corrupt too, but that doesn't mean we shouldn't have an energy policy.

Posted by heedless | February 24, 2008 3:07 PM

"I think Matt's too young to have flown an American airline before deregulation turned the airlines into glorified cattle calls for all but the wealthy."

Before airline deregulation, only the wealthy could afford to fly. I'd rather be able to fly and be treated like cattle than not be able to afford it in the first place.

Telecom deregulation is another good one, brought up just above. Anybody remember how much it cost 30 years ago to call long distance? Now why do you think it's so much cheaper now?

Posted by too many steves | February 24, 2008 3:12 PM

Hard to see telecom deregulation as such a blessing, unless you mean the advent of cellular, which is a different story.

Matt's desire for less land use regulation is the naivete of a city boy who has no clue about land use beyond zoning regulations in the Avenue U corridor or whatever.

Posted by Gene | February 24, 2008 3:14 PM

Re: The main problem selling a Scandinavian-style welfare state here is that Americans know it won't be competent Scandinavians administering it but the sort of surly affirmative action hires one sees working for the newest federal workforce, the TSA.

I travel a lot and know what-- I have never had any trouble with the TSA folks. I've even seen them behave with astonishing calm under circumstances that would have frayed my temper past the breaking point, as when some wealthy-looking businessman type was screaming at them for the indignity of his briefcase needing to be unlocked and searched, ranting that he knew the governor etc. I would have given the creep "the treatment". They managed to retain a firm politness.

Now, on the larger issue, Matt is talking about Iceland. Does anyone think that Iceland is a regulation free paradise-- that there are no environmental, health and sfaety standards that must be followed? I very much doubt it. I think some of the posters here are overreacting. I suspect that we could enact Iceland's level of regulation and see our health and safety and environemntal quality actually improve. There are however a lot of regulations that have nothing to do with health and safety-- they're about preserving some special interest perk, safeguarding an oligarch's economic fiefdom, or routing money into someone's coffers. Those we could happily do without.

Re: In reality, most americans haven't seen a raise above inflation for 3 decades.

I have to wonder about this. I'm certainly not a member of the 1% elite, but since joining the workforce after college (in 1992) I have seen my income go from 18K/yr to 70k/yr. I think that beats inflation. (I did have a downturn in those numbers in the 2001-2003 period, but after 2004 they resumed their upward movement). Even this year, despite the doom and gloom, I had a 5K/yr raise.

Re: I think Matt's too young to have flown an American airline before deregulation turned the airlines into glorified cattle calls for all but the wealthy.

Back then only the wealthy and business people whose employers were footing the bill could afford air travel. Lord knows I bitch about the airlines, but I'd rather have cheap tickets than princely but unffordable service. And the one thing that really matters air travel, safety, has not been compromised.

Posted by JonF | February 24, 2008 3:22 PM

Does anyone think that Iceland is a regulation free paradise-- that there are no environmental, health and sfaety standards that must be followed? I very much doubt it. I think some of the posters here are overreacting. I suspect that we could enact Iceland's level of regulation and see our health and safety and environemntal quality actually improve.

I think you're misreading the complaints.

This is precisely the problem with Matt's post. He's talking about Icelandic deregulation and Reaganite deregulation as if they're commensurate entities, and as you say, they aren't.

Posted by DivGuy | February 24, 2008 3:29 PM

Much of the time I can't figure out why the Atlantic picked MY to be a featured blogger, but from time to time he does have a completely on the money post like this one..

Posted by J.B. | February 24, 2008 3:29 PM

Heedless, if wages are higher than they've ever been, then surely we have to look back with awe at the single salary earner households of the Nixon era - they must all have been subsisting on the miracle of loaves and fishes, right?

But no, there was no miracles involved. According to Levy and Murnane (1992)

“U.S. earnings trends since 1950 are demarcated by two years: 1973 and 1979.
Nineteen-hundred-seventy-three marked the end of rapid real earnings growth and the beginning of slower growth bordering on stagnation.[ 1] Nineteen-hundred-seventy-nine marked the beginning of a sharp acceleration in the growth of earnings inequality, particularly among men.
Both slow growth and increased inequality appear in the comparison of adult male earnings distributions for 1979 and 1987 (Figure 1). Over the period, the proportion of men earning more than $40,000 (in 1988 dollars) increased, while the proportion of men earning less than $20,000 increased as well. The combination of increased earnings inequality around a slow-growing average means that significant numbers of workers--particularly younger, less educated men--now earn less than their counterparts of the mid-1960s.”

That was a snapshot from the early nineties. Since then, income growth in the majority of households comes from – increasing the number of hours worked. According to figures compiled by Elizabeth Warren and Amelia Warren Tyagi in The Two Income Trap, in the early seventies, the median household income in inflation adjusted dollars in the early seventies was around $38,700, which – discounting fixed costs, such as mortgages – left around 17,800 dollars in disposable income. In the early 2000s, with a dual income household, the median household income was $67,800 - but given the inflation of fixed costs, the disposable income was almost the same (see Warren and Tyagi, 50-51).

One of the interesting things about the unraveling of the housing market is that we now have a clearer picture of how things ‘cooked’ under the Bush administration. It was called tapping your expected asset inflation. It was called borrowing the shit out of the value of your house. And indeed, it did send the kids to college and purchase the hummer, but it all depended on the eternal and immutable law that house prices go up. That law is burning into a nice crisp.

As for benefits – you really have to be joking. The golden era of pensions has well past. Haven’t you been reading George Will, rightwing man about town, about how awful it is that unions demanded pensions from automakers? Robert Kuttner cites a study by Munnel and Sunden on retirement insecurity that estimates that 35 percent of those born between 1946 and 1952 will be at risk of not having enough income when they retire, which rises to 44 percent for those born between 1955 and 1964, and 49 percent between 1965-1972.

The Bush years were subpar even by the standard of the Carter years. But just as the Carter years were overshadowed by the last, awful year, so, too, this Bush year looks to be extraspecial - not only has junior made a worse mess of Iraq than daddy ever dreamed, but he's going to outdo Dad's recession, too.

Posted by roger | February 24, 2008 3:30 PM

Soulite,

I'm a bit confused by your response. The highest estimate of homeless Americans is 2 million, or well under 1%. (And that's the excessively pessimistic version) Even if you think renters shouldn't count (and I'm a renter, so WTF?), home ownership rates are somewhere north of 65%. That's "most Americans" any way you slice it. I think you are conflating "have difficulty affording" with "can't afford" here. This is understandable (I speak this way myself about my own finances), but it is innacurate.

I also quite specifically noted the situation of the bottom quintile of earners. If you take benefits and government assistance into account (The EITC is money in pocket, just the same as a paycheck), income has increased at above the rate of inflation for all quintiles. It has risen faster for the top quintile than for the bottom, but it has risen for the bottom as well.

I am tempted to suggest that, like the Clinton campaign, you are reaching for reasons that populations and statistics which don't support your argument don't count.

Also, Skeptica, if you remember flying an airplane in the 70s, you should also remember how much it cost. (In inflation adjusted terms, coach seats went for about what a business class passenger pays these days)

Posted by heedless | February 24, 2008 3:30 PM

There's some pretty good crazy-talk on this thread.

In reality, most americans haven't seen a raise above inflation for 3 decades. Most americans can't afford homes. Most Americans can't afford to send their kids to college.

Would love to see data proving any of those three things.

getting Thousands of workers killed due to safety hazaards every day

Or that one.

Is it somehow an improvement in "regulation" that Reagan slashed the number and scope of poultry processing inspectors, and that corrupt politicians of both parties paid off generously through donations from industrial pork producers kept up the dodge?

I must have missed the story about the hordes of Americans who died from under-inspected poultry since the Reagan administration. I know I missed the story that everyone in America--wealthy or poor--gets chicken at a lower price because chicken farmers don't need to waste time and money on extra "inspection", because that story is never written. Doesn't mean it's not true.

American business consists entirely of men who are emotionally fixated on being placed above the law. (Anyone with higher standards has long since fled in disgust.)

You've got to be kidding me.

Posted by right | February 24, 2008 3:33 PM

"Hard to see telecom deregulation as such a blessing, unless you mean the advent of cellular, which is a different story."

No, I mean deregulation, which happened well before the advent of cellular. After the Bell monopoly on long-distance was broken up back in the early 80s, long-distance rates fell through the floor. Thirty years ago, calling somebody long-distance was a special occasion, and you probably had to wait until off-peak hours to do it. By the end of the '80s it was no big deal, and even before mass competition from cell phones, rates were down to like 10 cents a minute.

We're talking past each other a lot here because there are 2 different kinds of regulation: health & safety standards and inspections, and price controls, government enforced monopolies, etc. The first kind of regulation is good. It's possible to have too much of it, but we're certainly not at that point. The second kind of regulation is almost always bad.

Posted by too many steves | February 24, 2008 3:44 PM

Soullite, I would like to see a citation for some of those facts you mentioned. Even where I live, in Southern California, where real estate is very expensive, more than 50 percent of people own their homes. A lot of other people rent. If you include everyone who needs section 8 assistance plus everyone who's homeless, you're still only at about 5 percent of people who can't afford homes.

Posted by too many steves | February 24, 2008 3:54 PM

(Apologies if the volume of my responses is reducing the quality. I seem to be defending deregulation all by my lonesome here. Matt, someone, help!)

Roger,

I don't disagree that inequality has been rising in the US. I simply don't see it as a catastrophe. That's a normative question though, and I doubt either of us is going to change his mind. (Probably not about any thing else, either, but I do like to argue)

As for the Nixon era one income household, there was no miracle involved in their budgeting, they simply made do with less. The median house was about half as large, a family owned (at most) one car and few electronics besides a (10 inch) TV. People rarely ate out. Getting sick was cheaper, but mostly because we couldn't treat anything but kidney failure or a bacterial infection.

The Two Income Trap's argument flounders on this sort of expansion of necessity. If you consider payments on a larger house to be fixed cost, then of course a modern family's fixed costs are higher. But they are also getting more for their money.

Also, pension troubles don't change the fact that total reimbursements have been rising faster than inflation for all income brackets. When you consider a family's economic circumstances, you have to consider all of their sources of income, and that includes in-kind payments from their employer (including healthcare and pension contributions, even if George Will disapproves) and all forms of government assistance.

Posted by heedless | February 24, 2008 4:01 PM

I'm too young to recall pre-deregulation air travel, and too poorly educated about microeconomics to speak with a whole lotta authority on this topic. But for whatever it's worth, I've found heedless's posts fairly persuasive.

I'm particularly persuaded by his (her?) point about income inequality. It has taken the Democratic party a long time to understand why old-style populism doesn't win elections by its lonesome anymore. The answer is something like what heedless is pointing at.

Posted by Ted | February 24, 2008 4:28 PM

That is, to clarify: inequality may have increased, but standards of living have increased as well. And though income inequality may be an evil, it's not the worst of all evils. Insecurity is a more powerful motivation for voters.

Posted by Ted | February 24, 2008 4:36 PM

Government enforced monopolies make perfect sense in many contexts. Remember that if unregulated, businesses do what is profitable, not what is in the public interest.

Consider a jurisdiction which is overwhelmingly rural and dispersed. Garbage collecting companies will focus only on profitable refuse routes in the few urban areas, leaving the rest of the region no choice but to burn its garbage. A government-enforced monopoly will force the company in question to service the rural areas in exchange for the benefit of also getting the profitable business.

Also, look at the national bus system. Prior to dergulation, Greyhound was required to service routes that relatively few people took, improving our national transport infrastructure. Nowadays, they've cut out the least profitable route, leaving many small cities with no viable inter-city transit whatsoever.

This only scratches the surface, and I don't think it is wise to overlook who gets marginalized whenever deregulation takes effect.

Posted by oljb | February 24, 2008 4:42 PM

Heedless,

We will go through this one two three:

"As for the Nixon era one income household, there was no miracle involved in their budgeting, they simply made do with less. The median house was about half as large, a family owned (at most) one car and few electronics besides a (10 inch) TV. People rarely ate out. Getting sick was cheaper, but mostly because we couldn't treat anything but kidney failure or a bacterial infection."
I think you are confusing the Nixon era with 1 million b.c., a popular movie starring Racquel Welch. I was a kid in the Nixon era. My grandparents, in their eighties, were involved in a severe car accident then. They went to the hospital, they came out of the hospital, and both lived until their 99th years. I guess ugga bugga, the surgeon shaman, must have sprinkled some magic dust on them. Myself, I had my teeth fixed, as did all my siblings - five kids. It didn't bankrupt my parents. Etc.

Sure, there was less stuff - although I don't think houses were half sized, and I imagine a comparison of lot size would be favorable to the Nixon era. On the other hand, there was less need of stuff. That is, two cars were not a necessity due to the fact that two people weren't requiring the cars to get to work. Gasoline was incredibly cheap - as it was again, in the late eighties and nineties - and given the amount of disposable income that was available, buying another car was well within the purview of the average household.

Education was so cheap that even as tuitions rose, "between 1967 and 1976, the percentage of income both lower- and upper-middle-class families spent on education actually declined," according to a 79 study done by the Congressional Budget office.

Personally, I think the tradeoff has been that the American middle class allowed wages to stagnate as long as opportunities for advancement and easy credit made well being available. Michael Mandel at Business Week pointed out the growth rate for consumption over the growth of GDP over the last ten years has been three trillion dollars. That's a good ballpark figure on how much the average American household has gone in hock to keep up the good life. If that easy money system dissipates, the hard contours of increased inequality will suddenly seem a lot more real to a lot more people. I think that the issue of numbers and values can be put pretty simply. I think the disposal income figures are real, and that the Bush administration, and the fed, which are currently proposing tossing the average American household into the furnace of inflation so that lower interest rates can get their rich investor base from out of their petty, trillion dollar doldrums, are playing with fire. A thirteen percent increase in the price of energy and food last year cuts deep into the disposable income the average household has. And I'm betting the doggies aren't going to like the rightwing dogfood anymore.

From Reuters, Feb. 15:

"The Reuters/University of Michigan index of consumer sentiment dropped to 69.6, well below analysts' median forecast of 76.3, from 78.4 at the end of January. The February reading was the lowest since February 1992.

"The sentiment index has only been this low during the recessions of the mid 1970s, the early 1980s and the early 1990s," survey director Richard Curtin said in a statement."

Posted by roger | February 24, 2008 4:44 PM

Deregulate land use? You'll have to explain that one.

Posted by jman | February 24, 2008 4:45 PM

Re: roger's last post. It's possible that the economic story we're in now is not the same story that ran from 1967-2000.

In an era of globalization, and real resource scarcity, we may confront a different set of constraints. It's even possible that real incomes, and standards of living, simply can't keep increasing at a twentieth-century pace.

So I'm inclined to think less about absolute income growth than about sustaining economic opportunity and security. Healthcare reform seems like an obvious place to start.

Posted by Ted | February 24, 2008 4:58 PM

I must have missed the story about the hordes of Americans who died from under-inspected poultry since the Reagan administration. I know I missed the story that everyone in America--wealthy or poor--gets chicken at a lower price because chicken farmers don't need to waste time and money on extra "inspection", because that story is never written. Doesn't mean it's not true.

First off, I love the sentiment that if consumers fail to die from a product, that adequate safety standards must have been met.

Every year, approximately 40,000 cases of salmonellosis are reported in the United States. Because many milder cases are not diagnosed or reported, the actual number of infections may be thity or more times greater. Salmonellosis is more common in the summer than winter.

Children are the most likely to get salmonellosis. Young children, the elderly, and the immunocompromised are the most likely to have severe infections. It is estimated that approximately 600 persons die each year with acute salmonellosis.

http://www.cdc.gov/ncidod/dbmd/diseaseinfo/salmonellosis_g.htm#How%20common%20is%20salmonellosis

Second, it wasn't always the case that raw chicken had to be treated like radioactive waste lest its salmonella exposure sicken a family.

Third -- well, there's those danged inspectors fouling up our cheap chicken supplies:

When the Agriculture Department could not convince Congress that meat and poultry inspections could be reduced, it ordered inspectors, in effect, to work harder for the same pay. Where chickens used to whiz past inspectors at 70 a minute, the line has been speeded up to as many as 105 a minute, prompting inspectors to take caffeine pills and complain about "hypnosis" from the blur of birds.

http://www.time.com/time/printout/0,8816,949759,00.html

But, you know, screw poultry processing inspectors, because they ain't real workin' folk, you know, like them guys at the Heritage Foundation or them workin' class knobs at the American Enterprise Institute, who obviously wear hard-hats and steel-toed boots and sling heavy malleted keyboards all the live long day.

And the above was produced by a partisan committee of Democrats, so of course, they were all just lying because Ronald Reagan carved the Grand Canyon with his own tears.

Fourth, is our chickens learning?

(CBS) The fresh chickens we buy in stores are more laden with potentially harmful bacteria than they were three years ago, according to Consumer Reports.

"We've got a very dirty industry out there," Urvashi Rangan, a senior scientist at the magazine, said on The Early Show Tuesday. "Part of the problem has to do with the inspection system, not testing for enough bacteria. It's simply faulty."

"CR’s analysis of fresh, whole broilers bought nationwide revealed that 83 percent harbored campylobacter or salmonella, the leading bacterial causes of food-borne disease," the magazine says in its January issue. "That’s a stunning increase from 2003, when we reported finding that 49 percent tested positive for one or both pathogens. Leading chicken producers have stabilized the incidence of salmonella, but spiral-shaped campylobacter has wriggled onto more chickens than ever. And although the U.S. Department of Agriculture tests chickens for salmonella against a federal standard, it has not set a standard for campylobacter.

"Our results show there should be. More than ever, it's up to consumers to make sure they protect themselves by cooking chicken to at least 165° F and guarding against cross-contamination."

What's more, the magazine says, premium brands aren't any safer.

"Overall, chickens labeled as organic or raised without antibiotics and costing $3 to $5 per pound were more likely to harbor salmonella than were conventionally produced broilers that cost more like $1 per pound," the article pointed out.

http://www.cbsnews.com/stories/2006/12/05/earlyshow/health/main2229433.shtml

That too is from them communists at Consumer Reports who fail to note that most people infected by, say, salmonella, end up living, and therefore experience no problems whatsoever, other than a few days in the toilet or in the hospital, especially children, since "only" about 600 people per year die of salmonella infections. Also, it was reported by CBS, and probably Dan Rather forged the study himself just to make Our Commander In Chief look bad.

And, finally, just in case I'm making all this up, there was this, too, recently:

Inspectors, watchdogs say shortages threaten meat supply safety

By GILLIAN FLACCUS, Associated Press Writer, February 22, 2008

LOS ANGELES

Sometimes, government inspectors responsible for examining slaughterhouse cattle for mad cow disease and other ills are so short-staffed that they find themselves peering down from catwalks at hundreds of animals at once, looking for such telltale signs as droopy ears, stumbling gait and facial paralysis.

The ranks of inspectors are so thin that slaughterhouse workers often figure out when "surprise" visits are about to take place, and make sure they are on their best behavior.

These allegations were raised by former and current U.S. Department of Agriculture inspectors in the wake of the biggest beef recall in history -- 143 million pounds from a California meatpacker accused of sending lame "downer" cows to slaughter.

The inspectors told The Associated Press that they fear chronic staff shortages in their ranks are allowing sick cows to get into the nation's food supply, endangering the public. According to USDA's own figures, the inspector ranks nationwide had vacancy rates of 10 percent or more in 2006-07.

"They're not covering all their bases. There's a possibility that something could go through because you don't have the manpower to check everything," said Lester Friedlander, a former USDA veterinary inspector at a plant in Wyalusing, Pa...

...USDA numbers show anywhere between 10 and 12 percent of inspector and veterinarian positions at poultry, beef and pork slaughterhouses nationwide were vacant between October 2006 and September 2007. In some regions, including Colorado and Texas, a major beef-producing state, the rate hovered around 15 percent. In New York, vacancy rates hit nearly 22 percent last July.

To bolster its ranks, the department is offering big signing bonuses of at least $2,500 to inspectors willing to relocate to 15 states. The agency has 7,800 inspectors covering 6,200 federally inspected establishments, 900 of which slaughter livestock.

USDA's Eamich blamed the vacancies on competition with private-sector wages, high costs of living and the often-undesirable rural locations of many slaughterhouses.

The agency hired 200 new inspectors in the past year, bringing staffing levels to their highest point since 2003, and cut veterinarian vacancies by half through hiring incentives, the spokeswoman said.

Felicia Nestor, a policy analyst with Washington-based Food and Water Watch, said the food supply may be at risk.

"I have talked to so many inspectors who used to work for the industry, and part of the training is how to get around the inspection. They've got walkies-talkies to alert each other to where the inspector is, they double-team the inspector," she said.

http://www.chicagotribune.com/news/local/chi-ap-slaughterhouseabuse,1,7253184,full.story

But, then, what do these commie-pinko latte-sippin' elitist so-called "food safety" officials know? All they want to do is punish the good patriot American conservatives whose poor, workin' class good ol' fashioned customers get cheap chicken at Wal-Mart.

Obviously, the only people who really, really care about consumers are those who claim that by deregulating something, good ol' workin' folks are better off.

Anybody else are just paranoid Vermont-type socialist danged organic la-di-das who ort to know better.

Posted by El Cid | February 24, 2008 5:02 PM

Heedless makes good points about the onerous costs of things such as long-distance phone calls and air travel before those industries were (partly) deregulated. A lot of the commenters here are probably too young to remember when even domestic air travel was unaffordable to most Americans.

Another example is stock commissions. Small investors used to have to pay ten times as much as they do now in commissions to buy a 100 shares of stock.

Regarding a couple of commenters anecdotes of positive experiences with the TSA: I guess you have traveled through different airports than I have. But the broader point remains: an expanded government won't be manned by a workforce chosen mainly through meritocracy but by one selected for other reasons. Steve Sailer had a great post a while back about why so many 'Greatest Generation' Dems had such high confidence in government: it was because government employees (local, state and federal) hired during the Depression often were first rate. They were required to take intelligence tests, and with a surfeit of applicants, only the smartest were hired.

This hiring policy also launched some Americans with few connections or resources into phenomenally successful careers in the public and then private sectors. One example that comes to mind is Paul O'Neil, who got his first federal job after scoring an extraordinarily high score on one of these tests.

Posted by Fred | February 24, 2008 5:14 PM

A lot of the commenters here are probably too young to remember when even domestic air travel was unaffordable to most Americans.

Indeed, I'm 58 years old and I don't remember this. I'll stipulate that both air travel and especially long distance telephone calls were more expensive pre 1978-1979 (approximate date of air deregulation iirc) than they are today, but it's silly to act as if they were so expensive back then that only "the rich" could afford them.

Posted by Gene | February 24, 2008 5:32 PM

Re: Robert Kuttner cites a study by Munnel and Sunden on retirement insecurity that estimates that 35 percent of those born between 1946 and 1952 will be at risk of not having enough income when they retire, which rises to 44 percent for those born between 1955 and 1964, and 49 percent between 1965-1972.

I don't doubt there's a problem here, but most retirement estimators overestimate the amount of money a person needs to retire.

Re: Regarding a couple of commenters anecdotes of positive experiences with the TSA: I guess you have traveled through different airports than I have.

Are you're sure you're not the traveller from hell making trouble for these folks, like the irate businessman I mentioned? Or maybe yoare blaimng the TSA personnel for some of the inane regulations ("Take off your shoes") they are required to enforce?

Re: it was because government employees (local, state and federal) hired during the Depression often were first rate. They were required to take

Intelligence tests do not a competent, courteous employee make. I've known plenty of bright, well-educated jackasses, with the manners of Hagar the Horrible and the attitude of your average tweaked up Goth-boy. The real problem is not affirmative action, it's the fact the government jobs do not pay as well as private sector jobs. Hence the best people end up working in the private sector. The Depression era you mentioned was an exception: lots of really good people could not find work in the private sector. But that's unusual.

Posted by JonF | February 24, 2008 5:50 PM

Iceland has 'unlimited space'? Deregulation 'destroyed our economy'? What planet are you people living on? Good thing there's a blog here for you here; otherwise you might be scrawling all this on home-made billboards in public parks.

Posted by Hope Muntz | February 24, 2008 5:51 PM

I flew before deregulation when I was just out of college and flat broke. Where do you people get the idea that only the rich could fly then? Are you too young to know and buying the propaganda, or were you living in some very isolated place where maybe it was true? I could better afford to fly then than I can now, and it was certainly more worth the price of the airfare.
And what makes anyone so certain that under a regulated industry airfares would be higher than they are now? Oh, of course: The Market is always more efficient; ergo, it absolutely has to be cheaper now under deregulation. That seems to be the level of discourse about the political economy.

Posted by skeptica | February 24, 2008 5:58 PM

Palin: Look, I CAME HERE FOR AN ARGUMENT, I'm not going to just stand . . .
Chapman: Ohhh. Oh I'm sorry, but this is abuse.
Palin: Oh, I see. Well, that explains it.
Chapman: Ah yes, you want room 12A. Just along the corridor.

Posted by Room 12a | February 24, 2008 6:24 PM

JonF,

"Are you're sure you're not the traveller from hell making trouble for these folks, like the irate businessman I mentioned?"

Yes, I'm sure. And it's not just the TSA where I've had to deal with unhelpful, rude, federal employees. I've had similar experiences with the IRS and the Patent and Trademark office.

"Intelligence tests do not a competent, courteous employee make."

They don't guarantee courteousness, to be sure, but they definitely improve the chances of hiring competent employees.

"The real problem is not affirmative action, it's the fact the government jobs do not pay as well as private sector jobs."

That's false. Government jobs often pay more and have better benefits than the jobs that would be available for the same employees in the private sector. Certainly, there is the potential for stars to make more in the private sector, but most of the folks who work for the TSA, for example, would be lucky to make more than $12 per hour in the private sector.

Posted by Fred | February 24, 2008 6:28 PM

"I flew before deregulation when I was just out of college and flat broke."

Where'd you go, Skeptica, and how much did you pay? I didn't say airfare was only affordable for the rich, just that most Americans couldn't afford it.

Posted by Fred | February 24, 2008 6:32 PM

This sort of seems to miss the point of regulation. In most cases, the government regulates industry and commerce not to make said industries and markets more efficient, but to prevent negative externalities that are judged to outweigh the deadweight loss of the regulations.

Put simply, the reason it is necessary to regulate to prevent ABC Corp from dumping waste into XYZ Lake is that the inefficiency of disposing of the materials in another way is outweighed heavily by the public interest in an unpoisoned lake.

Obviously there are exceptions - we regulate the financial industry primarily to make it run smoothly and only secondarily to protect the public from hornswaggling - but for the most part the question of what is the "most efficient" level of economic regulation in an industrial society is pretty irrelevant.

I think in a lot of ways modern liberals fall into the right-wing trap of believing the narrative that liberal busybodies just want to regulate stuff for no reason at all because we think regulations are good in and of themselves. But obviously that's nuts - everyone agrees you want the least regulation of business possible in a just society. Reasonable people simply can disagree wildly about what level of regulation that is.

APS

Posted by Ape Man | February 24, 2008 7:40 PM

"Telecom deregulation is another good one, brought up just above. Anybody remember how much it cost 30 years ago to call long distance? Now why do you think it's so much cheaper now?"

This problem could have been cured as well by nationalization, rather than the overly aggressive and mysterious market pricing we now endure.

Posted by Hedley Lamarr | February 24, 2008 7:58 PM

Ted Kennedy was the major mover of airline de-regulation in the late seventies. CAB, the now extinct entity that divvied up routes to the airlines and regulated ticket prices, was considered to be 'captured' by the majors - TWA, Pan Am. CAB kept opposing ticket discount schemes by the airlines.

Well, CAB fell, ticket prices went down, companies started going bust, and now periodically the government bails out airlines, either streightforwardly, post 2001, or when reactionary judges allow airlines to renig on their contractual obligations and loot their pension funds, as happened recently with United in 2005.

Posted by roger | February 24, 2008 8:06 PM

It tells you something about the liberal blog commentariat that Yglesias can praise the NORDIC MODEL and be denounced by his readers as a social darwinist.

You'd think he criticized Castro or Kim I'll Sung or something.

Posted by Pithlord | February 24, 2008 8:10 PM

Roger,

I apologize for the exageration about the state of medicine in the 70s. I let my need for a bon mot overcome my duty to be accurate.

Medicine was quite good for a whole host of illnesses and injuries then, but expensive tests like the MRI were just a glint in a physicist's eye, (the first MRI was available in the early 80s) and our ability to treat diabetes and cancer was primitive. In short, mamy of the miraculous discoveries that allow us to keep the grim reaper at bay (at great expense) simply didn't exist yet. Medicine is not more expensive because doctors are a bunch of greedy SOBs (they're not). Medicine is more expensive because it can test for and cure a great many more illnesses than ever before.

This NPR story compares average size of new homes. In 1970 it was 1500 sq. feet. In 2004, it was 2350. That's not double, but it is nevertheless a tremendous increase.

http://www.npr.org/templates/story/story.php?storyId=5525283

Your claim that families didn't need 2 cars because only one person worked is A) more than a bit sexist and B) beside the point. An extra car is a large increase in your standard of living, and most families have a least 2 cars now.

My point is not that life is somehow perfect, or that there is not a lot of room for improvement. My point is that, whether in the top income quintile or the bottom, Americans live better than they ever have.

A few final thoughts (ramblings, anyway):

El Cid, 40,000 cases of salmonella is 40,000 too many, but we're not exactly talking The Jungle here. The "killer spinach" scare last summer was newsworthy precisely because foodborn illness and death are such rare occurrences in America. It's possible that a more stringent inspection regime would be better than what we have now (I'm no expert), but this would, at most, make a very good record on food safety better.

Ted: Thanks for the compliment, and I'm a "him", for the record.

Posted by heedless | February 24, 2008 8:19 PM

El Cid, 40,000 cases of salmonella is 40,000 too many, but we're not exactly talking The Jungle here. The "killer spinach" scare last summer was newsworthy precisely because foodborn illness and death are such rare occurrences in America. It's possible that a more stringent inspection regime would be better than what we have now (I'm no expert), but this would, at most, make a very good record on food safety better.

If I bring up problems of relative seriousness within our developed nation, it's irrelevant, because, hey, this isn't the Congo where 5 million have died fairly recently from war, disease, and hunger.

Obviously if people aren't collapsing in the street every few yards from chicken infected with the Ebola virus, there's no problem.

On the other hand, if even one Democrat supports some regulatory regime that makes one investor for one moment slightly uncomfortable, ZOMG!!! It's worse than 8,000 Stalins combining with 12,000 Mao's to form a giant Kim Il Sung super killer robot!

So, okay, f*** it.

You could probably make poultry prices even cheaper by having no inspections, and we in the USA would still likely have far fewer infections and deaths due to salmonella than not only many modern nations, but many historic empires too!

The question follows, then:

Why did Reagan do anything?

If Reagan & his followers found some regulation or enforcement mechanism unfair or oppressive, why didn't they just say, "Hey, it ain't so bad -- why, it's not like we're throwing X into a gulag, so let's just let things stand!"

Come to think of it, why on Earth should we get all excited about defending ourselves from the terrists?

After all, they killed, what, 3,000 odd people on September 11th, out of a population closing on 300 million?

That's nothing!!! Pshaw! Hardly worth worrying about!

It's possible that a more stringent counter-terrorism regime would be better than what we had on September 10th (I'm no expert), but this would, at most, make a very good record on terrorist attacks better.

Posted by El Cid | February 24, 2008 8:31 PM

Pithlord, Yglesias is getting flak for praising the American model, not the Nordic one.

Posted by Barbar | February 24, 2008 8:43 PM

To the extent I gave him "flak" it was for brainlessly talking about "regulation" as a quantity, as though liberals had been wanting "more" and conservatives wanted "less", and somehow things have improved because Ronald Reagan waved his magic wand and made there be "less", and things got better.

Posted by El Cid | February 24, 2008 8:58 PM

Tax and deregulate is about as good a slogan as support free trade, which is to say, not very good.

Some regulatory regimes are prudent as ways of internalizing externalities, for example industrial emissions caps/trades. Some regimes persist despite inefficiency because they link up with patronage systems -- for example in some states entirely redudant state offices for filing financial statements remain in existence just because the political group affected couldn't be forced to part with the filing fees revenue.

Our problem in the U.S. is that "deregulation" is not engaged in on a prudent, case by case examination that weighs costs and benefits carefully. Instead, it gets swept up as part of a political movement, a nexus of libertarianism, anticommunism, business elitism, legacy of states rights/apartheid federalism, and a bunch of other ideological elements. In other words, down this path you get free trade agreements AND tax cuts for the rich, all of which leave most Americans worse off than where we'd be if we never had a movement that effaced every regulatory regime it got its hands on while rolling back the redistribution mechanisms that justify markets in the first place.

Posted by StJoe | February 24, 2008 9:01 PM

"You could probably make poultry prices even cheaper by having no inspections, and we in the USA would still likely have far fewer infections and deaths due to salmonella than not only many modern nations, but many historic empires too!"

"It's possible that a more stringent counter-terrorism regime would be better than what we had on September 10th (I'm no expert), but this would, at most, make a very good record on terrorist attacks better."

I actually agree with both these statements. If anything, we already sacrificed too many civil liberties on the altar of security before Sept. 11th. Granted, terrorism is a bit of a binary problem (they either manage to atack you, or they don't) so this sort of calculus is imperfect. Nevertheless, I think it is undeniable that a marginal increase in the severity of counterterrorism strategy will produce at best a marginal improvement in security.

As for the food issue, I simply don't see the current level of salmonella as a particularly pressing problem. At most, this is calls for cost/benefit comparison, where we consider whether an extra dollar per chicken (or whatever the actual cost is) is worth it to reduce the rate of infection from 1 in 10,000 per year to 1 in 15,000 per year. Personally, I doubt it.

Posted by heedless | February 24, 2008 9:05 PM

As for the food issue, I simply don't see the current level of salmonella as a particularly pressing problem.

If this were a struggling, tiny country which were only capable of handling a few things at once, perhaps. I don't consider it a "pressing problem" in my daily life, nor did I feel the September 11th attacks in my daily life via direct consequences, nor the flooding of New Orleans, nor the costs of the Iraq War, etc., etc., etc. So maybe this means it's a non-issue.

That said, you have expressed your judgments on the seriousness of the issue, and since you have declared that the current expenditures on food safety and the manner in which they have been spent are at or above your desired levels, you have expressed that too.

The opinions are unconvincing, but they have been expressed.

Since it's all just a verbal game anyway it doesn't matter, because anyone can play the game of "who's more icily detached from any potential consequences of various decisions."

Similarly, I could have scoffed at the suggestion that Americans need lower priced poultry, since they currently consume far too many foods rich in proteins and calories, and perhaps they need to slim down a bit.

Or I could go further and note how bracingly more competitive we could be if more people were at risk of starving to death for losing jobs, etc., but it doesn't matter, since it's all just a verbal jousting match anyway.

Posted by El Cid | February 24, 2008 9:16 PM

Comments: "...our ability to treat diabetes and cancer was primitive." Between 1952 and 1969, we had the perfect opportunity to use regulation to force the cancer rate way down. How? By severely regulating cigarettes. What happened, however, is the cigarette industry made up a scientific controversy where there was none about the carcinogenic properties of cigarettes - far and away the leading cause of cancer in the U.S. - and the number of smokers actually increased dramatically AFTER Richard Doll had demostrated that cigarette smoking led to cancer.

As for house sizes - here we encounter the complexity of social life. Indeed, house sizes have increased. Is this really due to the desire for larger house sizes? I'd say, partly that's true. But it is also true that one buys into a neighborhood. The good, middle class neighborhood that one could buy into in the seventies would contain a smaller house size as well as a larger one. That was no longer true by the early nineties. If you want to get into a good neighborhood, you are stuck - you don't have the VW bug option. Which is why you can't read consumer desire straight off a statistical figure. In the same way, people wanted smaller lots. Why? Well, one reason might be that a larger lot requires more care, and with two working adults in the household, there wasn't time for that.

At present, where I live, in Austin, there is a condo building boom downtown. The larger suburban house style is not what the new, tech fashionable yuppie seems to want anymore. If they turn to smaller sized, expensive condos, what will you do with your unilateral hedonic interpretation? Naturally, you'll have to say that smaller but richer spaces are infinitely more efficient, and show that we are getting richer and richer. Or whatever. I keep my eye, instead, on the disposable income.

Posted by roger | February 24, 2008 9:38 PM

roger:

What you said is historically accurate, but it seems a little muddled logically. "Regulate cigarettes" vs. "Get Suckered by Cigarette Companies" is a false dichotomy. The two choices have nothing to do with one another.

Also, cigarettes are a poor candidate for "regulation" per se. Regulation is an effective tool for internalizing externalities, as another poster pointed out. The harm from cigarette smoking is not an externality - it affects a party to the transaction of purchasing cigarettes (that is, the buyer.)

You could argue, as many have, that the health costs borne by society when smokers get sick are an externality of the transaction, but that's debatable, since the socialization of health costs is a separate issue, and it's also not clear that smokers actually cost society money on balance.

APS

Posted by Ape Man | February 24, 2008 9:53 PM

I'm sorry, too many bits of hyperbole on this thread to not pick on a few...

...Perhaps things haven't gotten worse, but things haven't gotten better for most people either. Over a 3 decade time period, that is just unacceptable. At the same time, for a very narrow elite, life is a thousand times better today than it was 30 years ago. That is unacceptable. Posted by Soullite | February 24, 2008 2:45 PM

I am curious, how old are you? I don't see any evidence you know what it's really like to be live in this country when the economy was truly suffering. I'm not talking about the great depression. Do you know what it's like to be looking for your first job when national unemployment is over 9%? Or to be retired when inflation is at 11%? We might be unlucky enough to experience that again soon, the way I see it as a boomer is that we've all been incredibly lucky since the late 80's, at minimum, it's basically been good times compared to the 70's and most of the 80's. The numbers at poverty level actually moved in the Clinton administration, that was something many said wasn't possible.

I spent my young adulthood believing that high inflation or high unemployment was a permanent and unavoidable condition, because that's what most of the economists used to say. We were often told to be damn happy we had a job, and many were quite aware that the postwar good times for blue collar factory work might be over once Japan starting buying up U.S. assets.

I never expected better than we've had the last couple of decades, never, neither did my parents or any of my parents' siblings. I think you are expecting miracles. You've already been through one, with the health of the economy holding through all of the Bush mismanagement and spending.

I think Matt's too young to have flown an American airline before deregulation turned the airlines into glorified cattle calls for all but the wealthy....

Posted by skeptica | February 24, 2008 2:53 PM

Like the results or not, those "cattle" are all the people who never used to fly because it was too expensive, they drove or took a Greyhound unless their employer paid for it. Ask anyone from the greatest generation.

Posted by artappraiser | February 24, 2008 10:52 PM