Postmodern Conservative.

Should We Tax Cheerleading?

by John Schwenkler

The sport accounts for nearly two-thirds of catastrophic sports injuries among high school females. Tyler Cowen handles the rest:

Loyal MR readers will know that I am a strong and genuine non-paternalist.  But if you are a paternalist, and you are looking for one place to start, well...it's not just the injuries that should point your attention in this direction.  We have to raise tax revenue from somewhere, right?  Currently we are subsidizing cheerleading and, along the lines of Robert Frank's column, that makes no more sense than subsidizing fuel.

Funny, I know, but I also think that it brings to light a pretty serious problem with the practical realities, if not the very idea, of Pigovian taxation: namely that the task of figuring out which negative externalities actually deserve to be taxed is by no means a trivial one, and so there is usually a quite a lot of heavy-duty-if-nevertheless-unarticulated moralizing underlying what can look on paper to be a matter of straightforward mathematics. And the outcome, as I have rather snarkily put it, very often looks more a backdoor route to the regulation of designated public vices (like driving and polluting, say, or maybe even stripping) than a simple matter of making people pick up the tab for the direct and indirect consequences of the things they choose to do.

Not that there's anything wrong with moralizing: quite the contrary, and indeed one of my standard complaints about overreliance on using taxes as tools for social engineering has been that such measures eliminate the need for substantive practical reasoning and put in its place a system where we manage to do the right thing simply by, in Ezra Klein's helpful phrase, shopping for the best bargain. (Both Ezra and Ryan Avent have responded to these complaints at some length.) But the problem here is that what I take to be the standard sort of Pigovian argument -- roughly, behaviors of type B have been shown to have probable negative consequences with social cost C, and therefore the sticker price of B-ing should be made to include those down-the-line costs -- is one that generalizes, dammit, and so threatens to include all sorts of totally non-tax-worthy behaviors unless clauses are attached that can do the requisite ruling-in and -out. In a nutshell, the problem is that not all negative externalities are created equal, and the task of figuring out which among them deserve to have their free passes revoked not going to be taken care of by appealing only to things like rising sea levels and likely health care costs.

Where to go from here? Hey, that's not my department -- like Cowen, I'm not much of a paternalist, and even when I am one I'm not especially inclined to paternalize by way of the tax code. But it seems to me that a more open and honest recognition that Pigou's ideas did not, after all, free policymakers of the responsibility of weighing costs and values with measures other than that of the dollar would be a nice step in the right direction.

P.S. Cf. the man himself.

Blue collared

by John

Having briefly lived in a city whose residents, like those of the surrounding municipalities, are largely dependent for their livelihood on the manufacture of one of the brands that is likely to be most affected by changes in the way America drives, let me remind everyone of the social costs of the governmental policies that help lead to decisions like this:

Mr. Wagoner said that rising gasoline prices had forced a “structural shift” by American consumers away from truck-based vehicles built by G.M.

“These prices are changing consumer behavior and changing it rapidly,” Mr. Wagoner said in announcing the cuts before G.M.’s centennial shareholders meeting in Wilmington, Del. “We don’t believe it’s a spike or a temporary shift. We believe it is, by and large, permanent.”

In what he called “difficult” decisions, Mr. Wagoner said that G.M. would close plants in Janesville, Wisc.; Moraine, Ohio; Oshawa, Ontario; and Toluca, Mexico by or before 2010.

The cuts will affect about 8,000 workers at the four plants, although not all of those people will lose their jobs. Some will be able to fill spots created when other workers leave because of early retirement and buyout offers.

The actions follow previous moves to cut shifts at two truck plants in Michigan.

“This is tough stuff,” Mr. Wagoner said after the meeting. “It’s not about we like this plant better than that one. It’s about that the market has radically changed and we have to adapt to it.”

Mr. Wagoner said it was “unlikely” that the plants would reopen at any point with new products, but declined to provide details about relocating workers to other plants.

Clearly, much of this is the result of "market realities" that arose, or at least would eventually have arisen, very much on their own and without any governmental prodding, but the fact remains that it is a sad lesson that warrants our concernful attention. Heaven knows I'm just about as crunchy as they come in my "personal life", and the fact that I'm thereby supporting bus drivers and local farmers rather than automobile manufacturers and soybean growers tends not to bother me one bit, but the consequences - that is to say, the consequences in the lives of persons and their families, and not merely "the environment" or (worse) "the economy" - of official policies that favor certain ways of life at the expense of others are much more far-reaching, and must always be borne in mind when we are up to our wonkery. (Think of the huge cultural effects of farm policies that have favored "high-efficiency" - that is to say, oil- rather than man-powered - agribusiness over family farming.) It is disheartening to see the selectiveness with which various political coalitions turn to such considerations, depending on the issue - pollution and climate change, same-sex marriage and adoption, crime and the drug wars, abortion, taxation, education, and so on - that is at stake.

My point here is not that the loss of these jobs - many of which are being replaced by others elsewhere in North America - shows that the price of gasoline needs to be artificially lowered or the automotive industry bailed out; rather, it is just to highlight the manifold ways in which our ideas have consequences. To insist that we (by which I mean those who influence and enact public policy) do no harm is, again, obviously too much. But we could at least try to be more cognizant of the scope of the damage that we inevitably do.

(Cross-posted at Upturned Earth.)

When Banana Republic Can't Move Stock...

...it's a recession, baby. Megs dishes. Stalled Old Navy sales = depression?

Fed Up

We'll be watching you...Benny.

Heaven Cent

Chris Suellentrop and Chris Orr gamely consider my plan to replace the penny with the nickel. If the NYT and TNR and TAS can all come together on this important issue, we can avoid having to heal the soul of America by electing Barack Obama. Or maybe we can save the penny and ditch the nickel simply by securing the Chris vote. Imagine if every Chris in America -- even just Chrises with blogs -- traded in their nickels for pennies. What an unboring media event that would be.

Swaddled in Chains or Hanging by a Thread?

Ezra points out the world's scariest chart, in which household debt rockets higher than the rise in US GDP, 2000 to present, to the tune of $3 trillion dollars. It's like our own private Iraq!

That's tremendous, and it shows just how much of the recent "good times" have been a function of the increased availability of debt, credit, refinancing, and a variety of other financial instruments that helped us feel rich today even as we courted a reckoning tomorrow. Essentially, we've been operating a procrastination economy, in which we refused to actually face up to the amount of work needed to restore broad-based wage increases and real prosperity. Credit has been the mechanism we've used to put it off. But now it's all piled up, and the job is much, much larger.

But here's a question. Is this just a matter of frighteningly intense laziness and denial, or is it a matter of the structural impossibility of restoring broad-based wage increases and real prosperity? Or even just a matter of no longer being able to enjoy fake prosperity and narrowly-based wage increases without a mountain of household debt?

Grim and Bear It, Part III

I should mention that what I am hearing from economy-watchers is pretty grim indeed on the big picture post-Bear. But if you haven't already, read Novak's latest at WaPo, which hits this ominous but darkly satisfying crescendo:

The Bear Stearns bailout, approved in private by unelected officials, contributes to paranoid grievances on the left and right that built support for Ron Paul's presidential candidacy. A Fed official conceded privately this week that "we may have crossed a line" in jumping into Bear Stearns -- and that is an understatement. There is no doubt that the U.S. economy is in uncharted territory, with reverberations that cannot be forecast.

I have gone easy on the Bush administration for making a lot of blunders and errors which can quickly be corrected or will pass away naturally over time. Even deeply entrenched boondoggles like DHS are unfortunate but mostly benign mistakes. But Bush may go down in history as having managed to oversee the profoundest macroeconomic mismanagement since the Depression. Probably not, I think, but maybe; and only in that context will the Iraq War really become a term of hate and bitterness in the American lexicon.

Grim and Bear It, Cont'd.

Ezra with the nutshell:

The banks that held the mortgages had begun letting other groups -- hedge funds investors, etc -- invest in the payback of mortgage debt. When consumers stopped being able to pay back mortgage debt, it wasn't only the banks who got hit, but the investors who were essentially insuring the banks. And because no one really knows who holds what debt, no one's really sure how far this thing will spread, or who will collapse. The fall of Bear Stearns was all the more unsettling because it was totally unexpected. And nothing scares the markets like the unexpected.

One more thing: I get the argument that bailing these folks out does too much to save the rich. But if we avoid a recession, it also saves the poor. Why can't the government do a bail out but insist on personal consequences? I.e, if these companies want help, their executive class gets fired. It's fine to want to teach Wall Street a lesson, but you probably shouldn't let the economy tank on principle.

Well, the market lusts after nothing like the unexpected, either...and in that sense, the principle that drives the whole system is expect the unexpected. Only trouble is everyone wins when the good unexpected happens. The bad unexpected is a little different. But Ezra's right to point out that the bad unexpected needn't mean everyone loses just to even things out. Although I'd add that avoiding a recession also saves the middle class. No, I'm not implying that losing the ability to lease your Lexus is worse than losing your ability to feed your children.

Market Bottom Line

Frank acknowledges that there are downsides to such an approach. “People who have been imprudent are going to benefit; I don’t dispute that,” Frank said. “But we have to do it for the better good.” -- Politico

How do you break the cycle of incentivized imprudence? Tolerate suffering, of course. But after a lifetime of raising the stakes, we are finding tough love -- imprudent.

Fight Through the Kitsch; Prize at End

I am toying with the idea of doing blog posts hereon out according to some kind of general daily theme. Last week, for instance, one day was a Posts About Whores, today it's Posts About New York, etc. Like most principles of organization, this one is stupid if followed faithfully and useful mainly as a heuristic to bring an ounce of focus to the goings-on here. At any rate check this out: someone actually wrote this:

Just a few years ago the prevailing style statement in Williamsburg featured metrosexually groomed urbanites wearing trucker hats and pristine Carhartt jackets and quaffing Pabst beer. Now some are choosing the real life behind the pose. [...] The Billyburg scene has changed, said Annaliese Griffin, who contributes to a blog called Grocery Guy. “Having a cool cheese in your fridge has taken the place of knowing what the cool band is, or even of playing in that band,” she said. “Our rock stars are ricotta makers.” -- NYT

The prize at the end of this instakitsch is...being a farmer! Yes, Wendell Berry's name appears in this article, though strangely only as an inspiration to young agricool kids from the 1970s. Whole books can and have been written trying to determine exactly what is going on here, and whether it's good, and I for one enjoy both PBR and clean country air, and, uh, cool cheeses as well. I'll try to restrict myself to point that maybe hasn't been made before: that this back-to-the-farm thing is natural in two ways. One, it's a market niche that makes perfect sense given how recently there were basically no alternatives to mass-produced artificial foods; it's something that reasonable people would and did think up given the homogeneity and undesirability of much of the food that's available today. In that fashion it's also a luxury. But luxuries, contrary to some opinions, are also natural, and it's natural then to think about what kind of luxuries one wants and pursues and enjoys. If you want to be less afraid of Nietzsche you can think about 'revaluing values' in this soft quasi-economic sense. What's your will to luxury look like? You may be less deserving of respect if it looks like a pristine Carhartt jacket than if it looks like cheese produced by a finely honed craft attuned to the productive quality of the natural world.

But organic cool is natural in another way, too: the luxury of religion -- as in, a long, deep tradition of religion closely enjoyed among family and friends across generations -- is foreclosed to many of the same people who willed the luxury of returning their orientation to the goods of natural life. This is to say nothing of the way that 'Billyburg' residents feel about Christianity in general. The return of organic is natural because when people are casting about for lives of 'integral' meaning they typically turn either to the soul or the soil. Wendell Berry himself was fairly clear I think that the Land, not the Lord, shall provide. Of course there's no inherent contradiction between living an organic Christian farm life. But the narrowing of horizons imposed by casting your gaze down to dirt and hearth does stand in a certain tension with the broadening of horizons imposed by casting your gaze up to God or out toward your fellow man. And returning to the recognition of this tension -- that abandoning one or the other isn't easy or right -- seems to me also both natural and a luxury.

Crossposted at The American Scene.