Tag: Policy briefs

Schwarzenegger’s 2006 State of the State address began with a topical self-deprecating joke that he stepped on in delivery

Now what a difference a year makes - a year ago USC and I were #1 - what happened?

and continued with a genuinely disarming and admirable apology:

I’ve thought a lot about the last year and the mistakes I made and the lessons I’ve learned. What I feel good about is that I led from my heart.

Now it’s true that I was in too much of a hurry. I didn’t hear the majority of Californians when they were telling me they didn’t like the special election. I barreled ahead anyway when I should have listened.

I have absorbed my defeat and I have learned my lesson.

The centerpiece of the speech was an enormous capital investment program, something the state desperately needs. Unfortunately, he poisoned the political well for this by accompanying it with a truly reprehensible lie, “And we can do it without raising taxes.” Perhaps it depends on what you think the word tax means; in this case, it appears not to include “moneys taken by force by government after my term of office.” Another item I liked was his explicit call to get the arts back in the schools, a no-brainer for a state whose economy depends so much on aesthetic goods and creativity, even if the arts weren’t mainly worth having for their own sake.

Sadly, the first item on the infrastructure list had the wrong recipe: 1200 lane-miles of highway and 600 miles of mass transit. If there’s anything we have learned in California’s last fifty years, it’s that we cannot highway our way out of the consequences of fundamentally contradictory demands. We may well have a right to live in a single-family houses on half-acre lots, drive anywhere we want (to work, for example), in a half-hour, and park free when we get there, but there is no reality in which those rights can be assured outside a decade or so around 1960. It can’t be bought even with a lot of money and especially not with money spent on roads.

Education, both higher and K-12, is promised a lot of capital and operating money. I believe we grossly undercapitalize people who work with their minds as a society, and this is especially true in education (note that my self-interest favors spending more on educational labor, not bricks and mortar). In a paper I wrote about classroom design, I once calculated that if one could increase college student learning by 5% through some capital improvement in a classroom, one would be ahead of the game to spend as much as the whole cost of the room. The abysmal state of classrooms in my daughters’ high school (attended, and the LAUSD school where the older one is teaching now) and across most of the Cal campus indicates that the governor’s intentions are correct in this matter.

The governor’s emphasis on infrastructure can be viewed cynically as a decision to adopt hardhat unions, and construction industry heavy-hitter donors, as his principal new political allies. But aside from his enabling of our continued pathological addiction to cars and roads, and his continuing refusal to tell the truth about taxes and public services, I think he is on the right track here. He’s talking about a $220 billion shopping list: this will cost the average California family about $2000 per year over a twenty-year period, or about one-and-a-half fewer new cars. Is trading the last $2000 worth of stuff we would buy in those years for well-chosen collective goods like schools, transit, soccer fields, and community theaters a good deal? In a New York minute.

What’s wrong with the speech more generally? Well, as regards the environment, he’s way behind the curve in not demanding a carbon fuel tax and a larger one on vehicle fuel. He’s asking for two new prisons, prisons that will entail enormous down-the-line operating costs and soak up money that could be used for crime and disorder programs that work much better. And there wasn’t a word about districting, the state budget process, Prop. 13, or term limits, four very costly dysfunctional elements of our non-physical infrastructure.

Why does a governor who doesn’t need the job find it as hard to provide real leadership (I refer here to Ronald Heifetz’ meaning of the term as enabling a group to find and do the adaptive work that needs to be done) as his pathetic predecessor, whose only visible motivation in any office was getting the next one?

We here at the RBC are generally opposed to good news or anything vaguely heart-warming, but I found this story, despite its happy theme, to be policy-relevant. The idea is that the DC humane society has set a goal of eliminating euthanasia for all adoptable animals in five years. This is interesting because the Washington humane society seems to be transitioning from a traditional non-profit organization orientation, as a provider of a discrete service, to a more entrepreneurial mode where they define their mission as a change in outcomes (here the outcome being eliminating euthanasia, which is really an indicator of the change in the world they want to produce, not the goal itself). The article notes that to get to this goal, simply increasing adoptions is insufficient: the organization’s CEO observes that “we can’t adopt our way out of the situation. We really have to reduce the pet population…” Especially in the case of cats, the problem seems to be that whatever the humane society does in terms of adoptions is swamped by the growth in the cat population-to deal with that they are engaging in a large-scale fundraising campaign for spaying and neutering. The other interesting story here is that the Society is actively trying to increase the supply of potential homes for cats and dogs, in part by encouraging landlords to allow pets, but of the greatest interest, by starting an “innovative pet retention program to help owners deal with problems that might cause them to give up their pets…” I’d be interested in the details of this, since it sounds vaguely like a behavioral approach to the problem. Instead of simply assuming that the role of a non-profit is to provide resources, they’re acting as if the competence of adoptees and their ability to cope with the social problems that pets create is also part of their remit. These behavioral dimensions of social interventions are increasingly a part of poverty policy, but does this show that a more aggressive style of social intervention is also becoming a part of non-profit ventures beyond (or perhaps, in a poor city like Washington, connected to) poverty? Please send us examples of “paternalistic” non-profit ventures not directly linked to poverty-reduction, and I’ll write up a blog entry soon summarizing them.

If you’d like to make a donation to the DC Humane Society, go here: http://www.washhumane.org/donations.html. I would note that the Humane Society’s campaign described above has a bunch of different discrete components, which would easily lend itself to specific, directed donations (that is, allowing people to direct their money to spaying or neutering), but at least on the website, there’s no facility for this. Perhaps one of our MBA-type marketing-trained readers should volunteer to help the society pump up their website: http://www.washhumane.org/donations.html.

Just below, Mike O’Hare looks for insight on the case before the SC on withdrawal of federal funding for schools that don’t permit military recruiters at their law schools. Mike admits to being perplexed, and asks Jonathan and me to help cure him. Sorry-I’m as perplexed as he is, for this is a genuinely problematic issue.

So, I suppose that I’m with the government on this one, tentatively. There is little evidence that the law schools’ forbidding recruiters actually does anything to weaken the (stupid) underlying policy here, while limiting recruiters’ access probably does have a negative impact on recruiting, thereby making the military (in particular the JAG corps, where the more liberal-minded recruits the better). I’d be interested in what Jonathan has to say here-I’m happy to be convinced that my instincts are wrong.

“When you take the King’s shilling, you are the King’s man” was the rule for British recruiters two hundred years ago. They would try to get lowlives and down-and-outs in bars to accept a shilling; it was regarded as a salary advance, so if you did, you were legally in the army. The Solomon Amendment just argued before the Supreme Court says that a university whose law school refuses access to military recruiters is in violation of the conditions under which it accepted the “King’s shilling”-that is, all its federal funds. (The military is thought to violate most law schools’ rules excluding recruiters for firms and agencies that discriminate, in particular on grounds of sexual orientation.)

I think the military’s practice regarding homosexuals is both stupid and evil. I also think schools should have no problem allowing recruiters of whom they don’t approve to have easy access to their students, and should advance their own agendas in the classroom, by research, and by their own good practice. And I think the creeping erosion of the tenth amendment by this tax-and-not-spend trick is bad practice even when it allows this or that good end to be advanced by employing it, and even if the holdings that have allowed it are impeccable legally. I have no idea, as a result, which side of the current case I’m rooting for. In fact, I don’t know whether I’m groping for political (Steve?) or legal (Jon?) insight…perhaps one of them will straighten me out so I can have a solid opinion; I really dislike not knowing what I think about an important issue like this.

We currently have half a million people, more or less, behind bars for drug dealing, an increase of something like twentyfold over the past two decades. Over that period, prices of heroin and cocaine have fallen by more than 80%. So, on the evidence, the idea that we can push drug prices up by putting more dealers in prison — an idea I once thought too obvious to need any argument — seems shaky at best.

But we’re still sending dealers to prison on the basis of, primarily, two factors: what they were selling, and how much. That makes sense only if the goal of drug enforcement is to shink the markets. If drug enforcement can’t shrink the markets, then we ought to be asking what it can do, and asking it to do that.

My nominee: reducing violence. Target the long sentences, and the vigorous enforcement effort that accompanies them, at the dealers doing the shooting. Try to make a reputation for violence a competitive disadvantage rather thana competitive advantage in the illicit drug business.

Obvious problems:

1. More work for investigators. Weighing the powder is easy. Identifying a dealer as a shooter is feasible. Proving beyond reasonable doubt that a dealers is a shooter is hard.

2. Missing some truly bad guys. Some of the people now going away for long drug sentences are well-known shooters who couldn’t be nailed for the people they shot (sometimes because the witnesses turned up dead). So some sentencing by conduct is already taking place informally. Making it a formal rule would mean that some really bad actors don’t get hammered.

3. Fewer informants. Long sentences handed out by formula encourage “cooperation” (aka “ratting out your friends”). The ten-year mandatory is the contempory substitute for judicial torture: it can make people tell what they remember, and even what they don’t remember. So getting rid of long mandatories for minor players will make all cases harder to make.

Still, reallocating cell space from big dealers to bad dealers makes sense, and the problem is how to make that happen, combining changes in laws with changes in policies. Not an easy problem, but one worth working on.

3.

It is well established that the best “job training” takes place on the job. But it is also well known that young, low-skilled workers are highly mobile from firm to firm, giving their current employers next to no incentive to contribute to those workers’ non-firm-specific human capital (which is economese for teaching them anything that would increase their value to their next emploers).

Why not figure out a way to estimate the human capital of each worker entering the workforce or re-entering it after some moderately long period (say, six months) and then give the employer a financial stake in improving that stock by paying the first employer a share of the worker’s payroll taxes over the next several years (maybe a declining share over time) no matter where that employee was then working? This would encourage hiring entering or re-entering workers, encourage giving them jobs in which they learn useful skills, and encourage employers to take the process of giving job references for current and former employees seriously.

Obvious problems:

1. It costs money. But given the public stake (thorough taxes and transfers) in increasing the human capital of low-skilled workers, and especially young ones, a well-designed program ought to be a net benefit even looking at the public fisc alone.

2. The market will take care of it; workers will accept lower wages for firms that invest in their non-firm-specific human capital, so there’s no market failure to fix. That assumes more knowledge and foresight than many young workers may have, and assumes away all the rigidities in the labor market that prevent such bargains from being struck.

3. It will disadvantage existing labor-force participants and those with high measured human capital compared to new entrants and re-entrants with low measured human capital. True enough, though the size of the effect is open to question. This problem could be eased some by phasing out payments gradually rather than sharply as previous labor force participation and measured human capital rise.

4. (The flip side of #2): In the past, subsidy programs for hard-to-place workers have proven to do more harm than good because program eligibility became a stigmatizing factor. Less of a problem if the program applies to lots of workers.

5. Many employers may ignore the payments in making management decisions, thus wasting the entire subsidy paid to them.

6. Whatever the system to measure previous labor force participation and human capital, some companies will try to game the system by taking workers whose actual job prospects are better than they look.

7. Another form of gaming would involve maintaining heavy turnover while providing next to no training, in hopes of collecting the subsidy from those workers who, on their own, later did well in the job market. A minimum tenure requirement at the first employer in order to trigger the payments, and a formula that considered the performance of all eligible employees, with deductions for companies that produced large numbers of “duds,” would help avoid that at the cost of increased complexity and perhaps some addition incentive to “cherry-pick.”

8. By reducing the cost to the firm of employee turnover, the program would diminish firms’ incentives to treat low-skilled new labor market entrants well once they were hired. Again, the subsidy formula might be jiggered to reduce that effect.

I don’t assert that any given subsidy program would be the optimal one. This idea needs a significant investment in design and testing.

What almost can’t be right is to continue to leave the incentive for firms to invest in the non-firm-specific human capital of low-capital new or returning labor force participants at zero.

When the action of a foreign government annoys or disadvantages us, we immediately think in terms of damaging the country involved in retaliation, rather than trying to weaken or displace the particular group of politicians who made the decision, or the party in power. This seems to me an error.

In general, it ought to be easier and less costly (in terms of unwanted side-effects and backlash) for the US to damage the BJP rather than “India” in retaliation for having built a nuclear weapon, the RFR or the SPD rather than “France” or “Germany” in retaliation for dragging their heels on Iraq. In particular, the economic interests of the big contributors to those ruling parties shouldn’t be hard to identify, and in some cases to damage.

Obvious problems:

1. We’d be “interfering in the domestic politics” of the target countries. Right. But why not? If it’s legitimate to try to put French workers, many of whom didn’t vote Gaullist in the first place, out of work because we don’t like what Chirac did, why should it be illegitimate to try to put Chirac himself out of work? In each case, we’re trying to influence the behavior of the French government. Why is the crude, clumsy, unfair approach less offensive than the targeted approach? Perhaps some foreign leaders would wear US opposition as a badge of honor; if so, perhaps we should try to become less unpopular in those countries if we want to be able to influence their elections. If we’re popular, then “the Americans are trying to defeat me because I offended them” won’t be a winning campaign theme for our targets.

2. We’d have to know who pays for the RFR, what they own, and what actions we could take to damage those enterprises. If we can’t find that out, the CIA and the State Department really do need new management.

3. We’re afraid of retaliation.

Targeting the ruling circle rather than the country may be more of a new idea in theory than it is in practice. I’ve been told, by someone I think reliable, that the Kosovo bombing worked only when we identified factories owned by Milosovich’s major backers and started to bomb them selectively.