Category: Law and Inequality

How Much Should a Person Consume?

In the book “Stuffed and Starved,” Raj Patel notes the startling incongruity evident in the “simultaneous existence of nearly 1 billion who are malnourished and nearly 1 billion who are overweight.” The two groups’ disparate ecological footprint explains a lot of this paradox of excess and deprivation. Jared Diamond summarizes the data provocatively:

A real problem for the world is that each of us 300 million Americans consumes as much as 32 Kenyans. With 10 times the population, the United States consumes 320 times more resources than Kenya does. . . .The estimated one billion people who live in developed countries have a relative per capita consumption rate of 32. Most of the world’s other 5.5 billion people constitute the developing world, with relative per capita consumption rates below 32, mostly down toward 1.

Diamond believes that we can avoid resource shortfalls if basic conservation measures are put in place. He argues that “Much American consumption is wasteful and contributes little or nothing to quality of life[;] [f]or example, per capita oil consumption in Western Europe is about half of ours.” However, a Cato Institute blogger (Randal O’Toole) appears to resist even basic steps to curb American energy consumption. He says “A better prescription would be to let markets work: If we really run short of anything, the price will go up, and people will consume less.”

O’Toole neglects to note exactly who will be consuming less, but the answer is sadly familiar. As biofuels become common, an American Hummer’s gas guzzling may well be raising prices for staple foods in the poorest parts of the world:

The food price index of the Food and Agriculture Organization of the United Nations, based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated this winter. . . Rising prices for cooking oil are forcing residents of Asia’s largest slum, in Mumbai, India, to ration every drop. Just in the last week, protests have erupted in Pakistan over wheat shortages, and in Indonesia over soybean shortages.

Though food prices have been rising in the United States, basic staples are becoming truly scarce for some of the world’s poorest. As the fungibility of food and fuel advances, the buying power externality strikes again.

Of course, it’s not merely “free markets'” fault here; the US needs to get out of the business of subsidizing ethanol and to revisit various conservation and public transportation strategies. Sadly, I doubt people like O’Toole would endorse the publicly financed political campaigns that could help end the former, or the planning efforts and taxes necessary to fund the latter. We can all have some hope that high prices will drive technological development. But, as Bruce Wilder puts it, “stories of ‘limitless possibilities'” do not constitute an argument.

Status Anxiety in the Professions

The most emailed NYT story at the moment is a litany of complaints from doctors and lawyers:

[S]omething is missing, say many doctors, lawyers and career experts: the old sense of purpose, of respect, of living at the center of American society and embodying its definition of “success.”

[P]rofessional status is now inextricably linked to ideas of flexibility and creativity, concepts alien to seemingly everyone but art students even a generation ago. “Now we have people trying to start a Facebook or a MySpace. You might be working like a maniac, but it’s going to pay off in status. You’re going to be famous, providing something people are going to know and use all over the world” [says one career guidance professional].

In a culture that prizes risk and outsize reward — where professional heroes are college dropouts with billion-dollar Web sites — some doctors and lawyers feel they have slipped a notch in social status[.]

Perhaps a brief swim in the TechCrunch DeadPool could bring these folks out of their quarterlife-style quagmire. For every glittering Mt. Zuckerberg, there’s an iceberg of “wanna-be-preneurs” with little more than a business plan and a prayer. Seriously, there are reasons for doctors and lawyers to be glum, but I think they have little to do with the fantasies of early retirement or nonstop creativity the article adumbrates.

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What’s Wrong With A Company Paying for a CEO’s Family to Fly?

120px-Bombardier.learjet60.vp-crb.arp.jpgMichelle Leder, of Footnoted, was on NPR’s Marketplace yesterday. The story: the worst examples of agency-costs in footnotes in SEC filings in 2007. (She doesn’t sell it that way, but that’s what it is.)

Bloggers have highlighted a few of Michelle’s “best” finds, including Edward Mueller’s agreement, as CEO of Quest, to permit his family members to use the company plane to travel back and forth to California (where his family was based) to Denver (where Qwest is headquartered.) Although the story was hyped as permitting Mueller’s daughter to commute daily to school — something of a modern-day Leonard v. Pepsico, there is no evidence that the family plans to fly back and forth in this way.

But who cares anyway? Increasing numbers of high-level executives work far away from home, commuting to headquarters for parts of the week. (The consultants’ four day week, but permanently.) Encouraging them to do so maximizes shareholder wealth because it (presumably) allows recruitment of talent that wants to live elsewhere. Now the problem with these schemes is that it is taxing for the executive and her/his home life to be separated from the family. As Professor Joan Heminway explains here, personal turmoil in a CEO’s life can have materially adverse consequences for shareholder value, and well-run companies probably ought to do everything they can to make executives personally happy.

So why not pay for a family to commute back to California, to enable a family member to finish her last year of high school surrounded by friends, while coming “home” to Denver when possible? If that makes Mueller happy, and reduces the chance that he would live in California and commute to Denver, Qwest’s shareholders win. If the argument is simply that the CEO should pay for this travel out of his own pocket, the flight costs will be imputed as income to him under the agreement, so the economics are basically the same. Given disclosure, these kinds of perks should be seen simply as salary-substitutes, at worst, and as ways to reduce the chance of disruption by increasing the CEO’s chance of having a normal family life.

Dailykos (which originally brought the story to my attention) had this to say:

And as this president likes to remind us, this is the ownership society, so don’t be surprised to learn that some of your retirement funds are going to fuel up that jet so an execu-kid can zip off to the prom.

But this is plainly silly. Would we prefer that Qwest simply paid Mueller more money? Or not disclosed the behavior?

The Heroism of Susan Pace Hamill

It is now sadly all too common to see public intellectuals pointedly ignoring–or even cheering on–growing inequality. Bloodless statistical accounts tend to miss the consequences that flow for poor families when taxes on the wealthiest are cut and social programs are gutted accordingly.

Professor Susan Pace Hamill has done an extraordinary job in turning public attention to this problem. According to the NYT’s David Cay Johnston, “her latest effort is a book, As Certain as Death (Carolina Academic Press, 2007), that seeks to document how the 50 states, in contravention of her view of biblical injunctions, do more to burden the poor and relieve the rich than vice versa.” Some statistics are really striking:

The poorest fifth of Alabama families, with incomes under $13,000, pay state and local taxes that take almost 11 cents out of each dollar. The richest 1 percent, who make $229,000 or more, pay less than 4 cents out of each dollar they earn, according to Citizens for Tax Justice, an advocacy group whose numbers are generally considered trustworthy even by many of its opponents.

As a cursory Google search shows, Professor Pace Hamill has honed her message with extraordinary clarity and skill in a variety of forums–law review articles, books, interviews, and even sermons. Prof. Pace Hamill’s engaged scholarship and contributions as a public intellectual provide a great model for those who seek to develop religiously inspired legal theory.

Hat Tip: TaxProfBlog; Mirror of Justice.

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Thoughts on Giving (and a book recommendation)

Mountain Beyond Mountains.jpg

So it’s Christmas Eve and for many C is for charity and C is for consumerism too. As Frank points out giving can be difficult in part because so many charities have become huge operations and one may wonder whether the money is going to the programs or to the administrative overhead. CNNMoney has a recent article about how to evaluate a charity. It suggests that 75% of the budget should go to its mission (what I call program) leaving 25% for administrative and fundraising costs (yes it costs money to ask for money). The article recommends Give.org and CharityNavigator.org as sites to see how a group uses funds.

Forbes has a survey of the top 200 charities by assets and efficiency. (TIP: use the sort by feature, not the article links. The links go to a useless slideshow. The sort by takes on to the charts.) Here is the efficiency list. Now it may be that some charities are not that efficient but still pretty good. Forbes suggests that 90% is quite possible and that under 70% is suspect. Remember it takes money to attract talent and raise money. Looking for charities with high efficiency is great but some programs require more in staffing to achieve goals. So another way to look at a charity is whether they offer some sort of metrics. Unlike private enterprise the return will not be as easily quantified. Still by setting goals, evaluating them, and seeing where program may need to change, many charities are better able to raise money. For it is easier to give money if one has a sense that someone is at the helm and making sure that the program is working. It may not succeed on each goal but it is focused on understanding why. In addition the idea of social entrepreneurship (see also The New Heroes) which focuses on a problem and tries to find solutions on a large scale uses some of this approach.

Now for a little consumerism. Someone I consider a friend of Concurring Opinions, Patrick S. O’Donnell, often shares excellent insights and further reading suggestions. In one such comment

Patrick mentioned several items for those interested in inequality and development. One of the mentioned authors is Paul Farmer. Although reading Farmer’s work is worth the time, one may desire something a little different from policy this time of year. As such I recommend Mountains Beyond Mountains by Tracy Kidder. It details how Dr. Farmer began and continues his impressive work in changing public health systems. So if you want to spend a little holiday money on yourself and want to read a great story that also reveals the problems and some solutions for a major social issue, get the book. I will warn that a friend told me about it, and I hated him for a bit, because I could not put it down and tend to other tasks until I finished.

Ed. Note: Ah yes Frank notes in the comments that one can give to Farmer’s cause at this link. Or I find this link easier for giving directly to Partners in Health.

Police on Steroids, Profs on Ritalin

cyborgflower.jpgThere has been some excellent blawgospheric comment on the Mitchell Report, a Black Sox scandal for our age (see, e.g., Jeff Lipshaw, Howard Wasserman, Michael Dimino and Alfred Yen). My question is: what will be the cultural impact? I think two recent stories on performance enhancement in other fields provide some clues, and suggest the wisdom of the PCBE’s worries.

First, the Village Voice has a long story on some possibly inappropriate steroid/HGH use in the NYPD. I say “possibly” for two reasons: 1) the slippery “therapy/enhancement” distinction here and 2) the threat posed by bulked up criminals. The Voice reports that “the Brooklyn District Attorney’s Office knows of 29 cops and at least 10 NYPD civilian employees—all well under the age of 60—who have received prescriptions for [steroids for] hypogonadism.” Doctors quoted in the story find it implausible that so many officers would have this disorder–but there are probably other physicians who have a much broader concept of disease. And if suspects are bulking up on illegal substances, who can blame the cops for trying to catch up?

The other story is on concentration-enhancing drugs increasingly used not only by students (an old problem), but now by professors. Andrew Sullivan asks, “So if a prof wants to do a little Provigil, it’s no worry for me. Why should it be a worry for anyone but the prof himself?” I think there are several reasons, not least the potential for medicalized competition to invade spheres of life we now deem constitutive of our identity. But for now let me just focus on how the police and profs examples intersect.

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Understanding Resistance to Redistribution

Over at Balkinization, Professor Brian Tamanaha worries that the “fabled American Dream, the supposed glue that holds our society together across its many fault lines, is a delusion for many.” He points to “new research [that] suggests the United States’ much-ballyhooed upward mobility is a myth, and one that’s slipping further from reality with each new generation.” (Even The Economist has recognized the problem!) Tamanaha wonders why the issue has so little visibility in national political debates, and gives several good reasons. I’d like to focus on one of them: the sense that increasing inequality “feels irresistible, the product of structural factors beyond our control.”

First, though this sense may be widespread, it is highly contestable empirically, and doesn’t really “ring true” at an intuitive level. Let’s not even talk about the justice or appropriateness of an executive making hundreds of times more than line workers–what about people who almost got to the top spot? As Eduardo Porter reports, “widening disparities in business, which show up in a variety of other ways, reflect a dynamic that is taking hold across the economy: the growing concentration of wealth and income among a select group at the pinnacle of success, leaving many others with similar talents and experience well behind.”

A form of “legitimation theodicy” has become important for some at the top, who reach for sports metaphors:

[Some] very wealthy men in the new Gilded Age talk of themselves as having a flair for business not unlike Derek Jeter’s “unique talent” for baseball, as Leo J. Hindery Jr. put it. “I think there are people, including myself at certain times in my career,” Mr. Hindery said, “who because of their uniqueness warrant whatever the market will bear.”

The flip side of this is a well-cultivated sense among the “losers” in the new economic order that their fates are their own fault. This is one reason why the SCHIP battle is so hard-fought right now: it is very important for those pursuing an inequality-enhancing agenda to insist that some people do not deserve health insurance. . . . and that that sin is so egregious as to be visited even upon their children.

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Posner: Show Me the Money (and Little Else)

Many scholars are interested in new ways of measuring well-being that go beyond crude measures of income. I have thought of the UN Human Development Index as a good step in this direction, but Richard Posner has come out against it.

I agree with Posner’s critique of commensurability implicit in such a ranking, and his points about the distortions that can be caused by the “bunching” of many countries around one indicator. But if there are going to be rankings by income, I would think he would welcome alternative perspectives. Instead, he frets that the US loses out in the UNHDI because its life expectancy figures are lower than many other countries. I found this section of his critique troubling:

If a country devotes resources to improving life expectancy, it has to give up some other good. It is hard to say that the United States is making a mistake in not spending more resources on extending life expectancy; many Americans think that we spend too much on health care already. One reason (though by no means the only one) that the United States ranks only 44th in life expectancy is that our large black population has an abnormally high death rate; the average life expectancy of black male Americans is only 69. This shockingly high death rate reflects deep-seated problems of American blacks that would probably cost an enormous amount of money to solve. The political will to expend those resources does not exist. This may be a misfortune, a tragedy, or even a sin, but to use it to push the United States down in an index of human development is a political judgment, rather than anything determined by neutral social science.

Query: is the UN constrained to measure well-being only via neutral social science? Is that even possible? Well-being and development are inherently normative concepts. Their capacity to reflect a society’s “misfortunes, tragedies, or sins” is a feature, not a bug.

Bargain Men

Wealth watcher Robert Frank presented some survey data on “marriage for money” in the WSJ last week. Willingness to marry for money was surprisingly widespread, but the question’s tactful wording casts some doubt on the data:

According to a survey by Prince & Associates, a Connecticut-based wealth-research firm, the average “price” that men and women demand to marry for money these days is $1.5 million. The survey polled 1,134 people nationwide with incomes ranging between $30,000 to $60,000 (squarely in the median range for nationwide incomes). The survey asked: “How willing are you to marry an average-looking person that you liked, if they had money?”

The question really gets at how much of a difference there is between a) an “average-looking” person and the respondent’s ideal match, and b) “like” and “love”. . . and since we don’t know if some respondents imputed the latter into the former, it’s not that useful. But I’ll give Prince & Associates credit for limiting the survey to people in a narrow income band–I’ve argued elsewhere that such “willingness to accept” figures are meaningless otherwise.

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How the Economics of the Well-Off Can’t Help the Uninsured

Two of the most perceptive health policy analysts, Drs. Steffie Woolhandler and David U. Himmelstein, provide a good “reality check” for those who think a Massachusetts-style health plan can fully handle the problem of the uninsured. (Though it took me a long time to figure out their title, “I am not a Health Reform,” was a play on Nixon’s “I am not a Crook.”)

Woolhandler and Himmelstein observe that the past twenty years of failed state-based health care reform (and mandates) do not bode well for the plans now being discussed among presidential candidates:

In 1971, President Nixon sought to forestall single-payer national health insurance by proposing an alternative. He wanted to combine a mandate, which would require that employers cover their workers, with a Medicaid-like program for poor families, which all Americans would be able to join by paying sliding-scale premiums based on their income.

Nixon’s plan, though never passed, refuses to stay dead. Now Hillary Clinton, John Edwards and Barack Obama all propose Nixon-like reforms. Their plans resemble measures that were passed and then failed in several states over the past two decades.

W&H are particularly disappointed by the recent Massachusetts plan; “even under threat of fines, only 7 percent of the 244,000 uninsured people in the state who are required to buy unsubsidized coverage had signed up by Dec. 1. Few can afford the sky-high premiums.” W&H should also acknowledge that in some cases the uninsured themselves are responsible; according to one recent study, “twenty-five percent are eligible for public coverage.”

W&H suggest that mandates will not work, but do not have the space to fully explore why. I think they are right to emphasize lack of affordability in plans, but a recent book suggests some deeper issues. Charles Karelis’s The Persistence of Poverty: Why the Economics of the Well-Off Can’t Help the Poor argues that we cannot expect impoverished individuals to react to economic incentives the same way that middle- and upper-class people do.

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