Tuesday, January 09, 2007

The Iraq War and Sunk Costs

Listening to conservative pundits, politicians, talking heads and blowhard bloggers in the wake of the November elections, it has become clear that these conservatives suffer from a problem they famously proscribe to liberals: emotional attachment to a policy regardless of its success or lack thereof.

One of the primary sentiments espoused by conservatives is that to give up on Iraq would mean wasting the lives of the 3,000 servicemen and women killed in Iraq, along with the suffering and misery of the tens of thousands injured.

In economic, and therefore unemotional and rational terms, this is a sunk cost problem. Those dead and injured soldiers are going to remain dead and injured regardless of whether we win in Iraq or whether we pull out tomorrow. Therefore, rationally, it makes no sense to consider their loss when deciding what to do about Iraq going forward. This judgement is harsh in it's rationality, but often good policy must put emotional considerations aside to avoid further compounding mistakes. Just as throwing money or other resources into a project that will fail is irrational, so might be throwing more American lives away on a war that by all accounts is doomed to failure.

That conservatives are emotional over Iraq is no surprise. Partisans always have an emotional attachment to their chosen policies, because they view those policies as an extension of their ideology that they in turn view as an extension of their very being. If their favorite policy fails, it means their favored ideology has failed, which means they may have personally failed by believing in something that wasn’t true or successful.

This emotional attachment to the Iraq war manifests itself in another way: we have all heard conservatives complain that anything but what the GOP favors will lead to defeat, and we as Americans cannot allow ourselves to be defeated. The connection is the same as above: a loss in Iraq means that we as Americans may not be able to coerce everyone into believing as we do, which may mean that we are not right to believe that America is superior.

Critics will say this is anti-Americanism or moral relativism. It isn’t, it’s realism. I firmly believe that our culture and system of law is far superior to that of the Middle East. But I do not believe, given the experience of the past four years, that we can successfully export our culture and legal system into other regions – especially the Middle East. We have tried our experiment in Iraq – and I supported it in 2003 – but it has failed. We are, as the bumper sticker says, creating enemies faster than we can kill them. Our foreign policy towards the Middle East has been and is a failure. These statements are not indictments of America, as the partisan hacks would have you believe, they are merely realistic indictments of our recent policy choices. It’s not an attack on someone to admit that they may have made a mistake, is it? That kind of attitude is one held up by fans of hard-core multiculturalism, that any criticism or simple dislike of something expresses hatred that is to be eradicated.

Had we made the right choices from the beginning, perhaps things would be much different now. But there is nothing we can do about that now – the can of ethnic hatred and a degraded society has been opened and it’s not reasonably within our ability to re-close it.

Wednesday, November 22, 2006

Quick Hits

On the Milwaukee County Budget:

The budget that passed a couple of weeks ago was a complete travesty and the worst example of policy-making in recent memory.

When it came to the pools, the County Board basically had this choice:

Imagine you have a Winnebago motor home from the late 1970s. You used it a lot in the past before the kids moved out to go to school, and now it’s in a state of disrepair. Fixing it up would cost a boatload of money – new tires, shocks, engine, transmission, the works. Say the repairs would come to about $15,000. You have the option to simply replace it with a new camper that would be cheaper to operate (it’s a trailer instead of a gas-guzzling motorhome) and is smaller to accommodate just you and the spouse with no kids, and comes complete at about $10,000.

The Board inexplicably chose to repair the Winnebago. Whether it was really out of cold political calculation just to deny Scott Walker any kind of positive victory, or whether it’s a symptom of their complete and total inability to cut any County service in any way, it was perhaps the most idiotic policy decision this side of invading Iraq.

Then there was the restoration of the parks positions. The Board continued the County’s tradition of protecting its workforce at all costs. Regardless of any concessions DC 48 makes – and they won’t make any because they know they have plenty of Supervisors in their back pocket anyway – the funds included in the budget cannot cover the cost of those positions. How about showing some – get ready for it, because we haven’t seen any in a long time – leadership and telling the union that enough is enough? We’re not going to pay you $40 an hour in total compensation when the taxpayers can receive the same level of service for $20 an hour? The majority of this County Board apparently never considers that kind of calculus, or rather basic counting.

On the elections

The hacks have been at it the past two plus weeks trying to decipher the results of the election. The GOP majority wasn’t conservative enough, the GOP majority was too conservative, it was the mainstream media, Iraq sucks. As usual, they miss the forest for the trees (though that last one is unquestionably correct).

Here is specifically what the voters said on November 7:

“We’re sick and tired of the incompetence that results when hacks put partisan interests ahead of good government. GOP, you’re fired. Democrats, you’re our only other choice, so here you are, you give it a shot. “

Anyone who thinks the majority liked the Democrats’ message or even the Democrats themselves is dreaming. This was no landslide – the electorate did not gravitate towards anything they liked. It just so happened that a few more clear thinkers like me decided enough was enough, while a few others thought (like I also do) that the Dems would actually do worse and went with the devil they knew. This is why so many Dems won with 50, 51, or maybe 53 percent of the vote if they were lucky.

In other words, the electorate literally went, “Democrats? Well, I guess.”

Friday, October 27, 2006

Vote against the marriage ban

Opponents of gay marriage or civil unions like to pretend that the courts represent an “unelected, tyrannical threat” against the will of the people when they strike down laws passed by elected legislative bodies. They also like to pretend that the Founding Fathers would have agreed with them.

These claims are simply untrue, because the Founding Fathers addressed these very complaints before the Constitution was even ratified. The Federalist Papers, written by James Madison, John Jay and Alexander Hamilton, laid out the case for how the federal government would and should work, and why. The folks who make the above false claims often claim they are for “original intent” when interpreting laws. If that’s the case, numbers 78 to 83 the Federalist Papers represent THE Founding Fathers’ original intent of the role of the Courts.

Passages in the Papers make clear that the role of the Courts is to interpret laws passed by the Legislature for the Constitutionality. Consider Federalist 78:

“No legislative act, therefore, contrary to the Constitution, can be valid. To deny this, would be to affirm, that the deputy is greater than his principal; that the servant is above his master; that the representatives of the people are superior to the people themselves; that men acting by virtue of powers, may do not only what their powers do not authorize, but what they forbid.”

Or Federalist 81:

“I admit, however, that the Constitution ought to be the standard of construction for the laws, and that wherever there is an evident opposition, the laws ought to give place to the Constitution.”

The Fathers envisioned this role for an independent court system specifically because they completely trusted neither the Legislature nor the will of the people. With regard to the Legislature’s ability to interpret the constitutionality of its own work, consider again Federalist 81:

“From a body which had even a partial agency in passing bad laws, we could rarely expect a disposition to temper and moderate them in the application. The same spirit which had operated in making them, would be too apt in interpreting them; still less could it be expected that men who had infringed the Constitution in the character of legislators, would be disposed to repair the breach in the character of judges.”

The idea that the Fathers had total faith in the will of the people ought to be dismissed by the existence of the Electoral College and of an unelected Senate. Federalist 78 makes clear that the fathers were wary of the “will of the people” when it came to passing legislation:

“But it is not with a view to infractions of the Constitution only, that the independence of the judges may be an essential safeguard against the effects of occasional ill humors in the society. These sometimes extend no farther than to the injury of the private rights of particular classes of citizens, by unjust and partial laws. Here also the firmness of the judicial magistracy is of vast importance in mitigating the severity and confining the operation of such laws.”

Federalist 78 continues,

“This independence of the judges is equally requisite to guard the Constitution and the rights of individuals from the effects of those ill humors, which the arts of designing men, or the influence of particular conjunctures, sometimes disseminate among the people themselves, and which, though they speedily give place to better information, and more deliberate reflection, have a tendency, in the meantime, to occasion dangerous innovations in the government, and serious oppressions of the minor party in the community.”

The second passage is especially prescient considering an article about gay Republican staffers that appeared in the Washington Post on October 20, which quoted one Capitol Hill staff member as saying,

"You have to separate the marketing from the reality. The reality is, these members are not homophobic. For the most part, they're using this marketing to play to our base and stay in power. They have to turn out the votes,"

The Founding Fathers were ahead of their time, because these passages could easily be applied to the wedge issues – such as gay marriage bans and flag burning amendments today – that are designed by politicians, political operatives, and interest groups (designing men practicing their arts) to anger people into voting their way. Indeed, when it comes to wedge issues and other laws designed to influence social behavior, Federalist 78 states eloquently,

“It not only serves to moderate the immediate mischiefs of those which may have been passed, but it operates as a check upon the legislative body in passing them; who, perceiving that obstacles to the success of iniquitous intention are to be expected from the scruples of the courts, are in a manner compelled, by the very motives of the injustice they meditate, to qualify their attempts.”

The Founding Fathers are warning elected officials against wedge issues: We created the courts specifically to protect against your attempts to rile up the public and gain political support with wedge issues that needlessly discriminate against a minority group. If you can’t explain why your law is Constitutional, then don’t bother.

Those who claim it’s a “slippery slope” towards incest, polygamy, and the like ignore the fact that it was codifying marriage into law in the first place that greased the slope. If hetero married couples (like me) didn’t have any legal benefits, there would be no reason for homosexuals or anyone else to demand the same – those really would be “special rights”. Marriage is a private matter, but if you're going to legislate on it you have to treat everyone the same. There is literally no Constitutional reason to legislate against gay marriage and the courts are right to strike down such laws based on the intent of the Founding Fathers themselves.

Tuesday, September 26, 2006

You can't elect people who won't do the job.

I attended the debate between State Senator Tom Reynolds and his challenger, Wauwatosa Alderman Jim Sullivan on September 21 at St. Therese Catholic Church. As everyone knows, it turned out to not be a debate since the incumbent failed to show up.

Tom Reynolds’ campaign is a disgrace, to the political process, to the Republican Party, and to himself.

If you’re afraid of having video or audio taken of the things you say, then politics is the wrong business for you. If you’re afraid that you’re going to say something stupid that can be used in an attack ad, then politics is the wrong business for you. Speaking in public, being recorded and even being attacked for what you say are included in the job description of being an elected official. If you don’t want to fulfill the requirements, then seek employment elsewhere.

Should we be surprised that Reynolds sponsored a bill that would let other folks – pharmacists – simply decide to not do their job on occasion?

When it comes to Jim Sullivan, I thought he did a great job at the debate. As a Republican – a sane Republican – I disagreed with a few of the things he said. But he was gracious, friendly, and had clearly given the issues on which he was questioned ample thought. Unlike his opponent who is a coward, Sullivan put himself out there to meet the voters and give us an opportunity to judge whether we think he’s fit for the job. Again, he met the requirements of the job he is seeking, unlike his challenger.

If anyone reads this blog and lives in the 5th Senate district, I ask that you support Jim Sullivan, if only to put an end to the embarrassment our district currently suffers.

Monday, August 14, 2006

What is the value of “taking sides”?

The Milwaukee Journal Sentinel ran an article in Sunday’s paper about whether we as a nation are too politically polarized for our own good.

The paper published some excellent comments in both the print and on-line editions. The number of pro-centrist, anti-partisan comments published indicates either the majority of the papers’ readers are centrist, or the paper wants us to believe that.

Liberal blogger Bill Christofferson took up the issue in his blog on Sunday in response that was rambling and inconclusive, apparently coming to the conclusion that we centrists decide the political issues in elections and that that ought to be good enough.

But what caught my eye was a response by one poster who said, “The middle are generally weak thinkers who are afraid to take a stand out of fear of retribution, typically they stand for nothing”. The poster went on, typically, to say that he was taking a stand by choosing one party because it stood up against the evil “other”.

What does “taking a stand” mean? To this poster, and to most partisan hacks of similar stripe, it’s obvious: taking a stand does not mean researching an issue, thinking through the alternatives and their likely (or possible) outcomes; rather it means choosing one side for the sake of choosing sides. In other words, taking a “partisan stand”.

Taking a partisan stand requires not becoming informed and not thinking through issues. One party tells us activist government, using regulations, tax incentives, and aid for the poor or disadvantaged is the right thing to do. Another tells us free markets, low taxes, tough defense, and morally-correct choices are the right thing to do.

The problem is that today’s policy decisions are too complex to fit into these simplistic partisan philosophies. Some issues require government involvement. Sometimes the private sector works better. Sometimes while we wish everyone would make the “moral” choice, it’s not realistic to mandate that people do so. These problems exist within issue areas. On the environment, empirical evidence has shown that government involvement is necessary but policies work best when based on the free market. When it comes to helping the disadvantaged, some government invovlement is good for some things but cannot overcome intractable problems.

Think of it like a home repair project. Pretend you have two tool boxes, which represent the two major parties and their philosophies, each with different tools. The weak-thinking partisan will take his tool box and demand that the tools in it will do the job. Even if they continually show signs of failing (like, for instance, Great Society-era welfare or abstinence-only education), the weak-thinking partisan will refuse to even consider looking in the other tool box to see if there is anything of use. Instead he or she will just attack the other tool box and dismiss it out of hand.

The strong-thinking centrist on the other hand says the hell with which tool box the tools are in, and looks for the right tools to do the job well.

Tuesday, June 27, 2006

Higher Taxes in Milwaukee County?

In case you missed it in Sunday’s paper:

“While relocating executives are often excited about the size and setting that they can get for their $1 million here, they're taken aback by the high property taxes.
"They're very, very surprised at how high the property taxes are in Milwaukee County. Maybe that's a good reason why Ozaukee and Washington counties are doing well with the higher-end houses," she says.

The taxes on two just-sold houses explain why:

• A Milwaukee County house that sold for $1.05 million had a 2005 tax bill of $22,000.
• A Mequon house that sold for $1.15 million had a 2005 tax bill of $14,000.”

I have a similar story. While living in Washington DC, my wife and I were looking at homes much cheaper than this. When we ended up moving to Wisconsin, we found that our Milwaukee County home that cost $100,000 less than what we were looking at in Virginia and D.C. had property taxes twice as high.

Aren’t Executives and people like me the type that Milwaukee County should try to attract?

‘Nuff said.

Strategic Planning vs. Credit Card Government

The gargantuan deficits coupled with massive tax cuts tend to show that Jonathan Chait at the New Republic is right when he recalls a 1964 psychological study that suggested,

“Americans are ideological conservatives and operational liberals. Everybody's for less spending and regulation in the abstract. When you try to translate that into specifics--say, lower Medicare benefits or looser standards on pollution--voters run screaming in the other direction.”

This phenomenon is further backed up by William Niskanen’s work at the Cato institute. In two papers from 2002 and 2004, he stated that “Starve the Beast” fiscal policy- that is cutting tax revenues in order to force a reduction in programs due to deficits – does not work because conservatives don't have the political will to cut programs.

In a nation saturated with credit card debt and zero-principal mortgages, our approval of government that spends more than it takes in should not be surprising. The consequences of individuals’ desire to “have it now but not have to pay for it” are bad enough – millions of people get in over their heads with debt and face bankruptcy and the emotional stress that comes with it.

But these consequences pale in comparison to what could happen if we continue to apply this same attitude to government. We have a local example here in Milwaukee, as the County careens towards insolvency thanks to exorbitant long-term fringe benefit costs. Daily the public is bombarded with stories about how it is going to lose access to pools, cultural amenities, 911 service, and who-knows-what-else-is-next. Worse, our federal government faces the same problem. As Washington Post columnist C. Fred Bergsten points out on Monday , our federal fiscal situation is close to being Milwaukee County magnified a few hundred times. The difference of course is that Milwaukee County’s insolvency probably would have little effect on anyone not reliant on its services; while the federal government going insolvent would have ruinous effects on our economy.

A movement is underway in public-sector budgeting, however, that just might pull governments back from the brink. It involves coupling taxing and spending with strategic planning.

It works much like strategic planning in the private sector, but instead of income growth the goal is practical and sustainable use of taxpayer resources. In the hands of intrepid and dedicated politicians and public administrators, it has the opportunity to give the public the ability to – maybe for the first time – have a real debate where it will decide which government services it wants and how to pay for them.

The short story on how it works is this: Elected officials poll the public to determine which service areas it thinks are most important. They then determine, based on current political dynamics, how much tax revenue they think they want to raise. If they are fiscally conservative, they will keep tax revenue increases low or perhaps cut revenues. If they are liberal, they may propose significant increases. Next, the elected officials determine how much each program and service in their government will cost to provide. Once this information has been estimated as accurately as possible, it becomes an exercise in shopping. With X number of dollars available, the elected officials can choose which services they will fund based on their estimated costs, prioritized according to the polling information gathered. Really thoughtful officials will seek to provide high-priority services as efficiently as possible, because reduced costs for higher priority programs means more resources remain for lower-priority services.

This system is not easy to implement. Obviously low-cost should not be the primary criteria for choosing how a high-priority service will be provided. The Governor for instance would find himself in the unemployment line for replacing State Patrol officers with a rented security force. This process will also create winners and losers: lower-priority programs will see their funding reduced or eliminated altogether, while higher-priority programs could receive a greater share of resources than they already get.

The good news is that the public knows what it is going to get with its money. A good budget will explicitly and simply inform the electorate how their money is being spent. Elected officials in passing a budget will make clear to the public what their priorities are. In a County Government that may mean choosing to fund the Sheriff and Human Services over parks and recreation.

This gives the public an opportunity to demand reprioritization either in next year’s polling or in next year’s elections. If the elected officials are too stingy and don’t fully fund the public’s priorities, or likewise if the elected officials choose to fund too many low-priority programs with too much tax money, the public has the opportunity to make that very clear come election time.

Naturally government acceptance of strategic budgeting is going to be slow. Unions and fans of social spending will be loathe to adopt this process if their programs are deemed low-priority by the public and subsequently funded appropriately. Constituent groups will apply pressure to keep the flow of resources going. Turf battles will become more intense.

If successful however, widespread and competent acceptance of these principles can hopefully make the public’s choice between taxes and services an easier one. It is then up to the electorate to finally accept that they have to pay for what they want.

Thursday, June 22, 2006

Milwaukee County's $59 Million Pension Problem

When the news broke this week of the need for Milwaukee County to contribute a whopping $59 million to fund its pension system, the liberal blogosphere predictably blamed County Executive Scott Walker for the problem.

Seth Zlotocha and Jim McGuigan suggest that Walker shorted the pension fund in the 2006 budget because, while running for governor, fewer people would care about pension funding than they would about funding for programs from which citizens actually benefit. They suggest that Walker should have set priorities and cut programs in the 2006 budget instead of underfunding the pension.

The motive that these bloggers assign to Walker is misguided. Walker proposed underfunding the pension in his 2006 budget because he wanted to send a message to the County Board that to this day has not been heard: The County does not have the money to fund employee fringe benefits (including the pension) and maintain services at present levels.

Walker has made no secret of his desire to scrap the current unsustainable defined-benefit pension system for a less expensive defined-contribution, 401(K) style system. The Board, supported by County Employee unions, has not been perceptive to this idea. Walker proposed Pension Obligation Bonds to at least attempt to reduce the cost of the current system. The Board and the community were not perceptive to that idea either.

The liberal bloggers have merit in their complaint that Walker, prior to this year, has not set priorities and not gotten serious about cutting programs. But when it comes to the budget, Walker can only propose such a plan. It is up to the County Board to actually approve them.

Herein lies the problem: even if Walker had done this by proposing a substantial reduction in services based on an in-depth strategic plan, the Board has not shown that it would accept any cuts. The Executive did propose several smaller cuts in his 2006 budget. For the most part they were not adopted. For instance, the Board overruled a proposal to eliminate the obsolete and ineffective County Farm during the 2006 budget process – a program that amounts to only $180,000 of the County’s $80 million problem. They further approved increases in contract services for human services providers and approved phantom state revenues to cover proposed cuts to Circuit Court Services.

If they did not have the stomach to cut a $180,000 program, will they have temerity to eliminate the Zoo or the General Assistance Medical Program?

This mentality, not the Governor’s office, was the target of the Executive’s proposal in 2006. The Budget laid the choice before the Board: If you are not interested in cutting services, then the pension contribution has to be cut - you cannot keep both. The Board responded by restoring most of the cuts actually proposed and adding what little phony revenues it could find to the pension contribution and other programs. If Walker deserves to be chastised for being to gentle – and he does – the Board deserves outright scorn for not even accepting Walker’s minimal cuts.

This is the reason the County is literally going bankrupt. The County Board will not make any choices that involve prioritizing how resources are allocated. They and the liberal bloggers will try to blame Walker’s zero tax levy-increase. Increasing the tax levy, due to state-mandated caps, would provide a proverbial drop of revenue in the expense bucket. They will blame Walker’s lack of support for a sales tax increase. A sales tax increase is not realistic due to its certain death in Madison. Worse, it lets policy-makers off the hook by simply continuing on their present path instead of prioritizing and finding efficiencies.

The sad fact is that Milwaukee County has enough money to provide every single service it currently offers, and it could provide it with better quality if it were not under the weight of a $59 million pension bill. Consider this: if Milwaukee County employees participated in the State retirement system, with roughly a 10% contribution based on employee salaries the County’s pension bill would be around $26 million in 2007.

Imagine how many pools you could keep open with an extra $23 million.

If the County were not spending $60 million on health insurance for 57-year old retirees who are leaving with $300,000 lump sum payments, imagine the housing it might be able to find for its mentally ill.

Eventually the choice is going to have to be made.