Elitist Hokum from Krugman

by Chidem Kurdas

It has become a standard left-liberal jibe that those complaining of government largesse receive a piece thereof themselves. Such beneficiaries go against their own interest if they favor smaller government—so it is alleged. Thus Paul Krugman in the NYT  largely agrees with Thomas Frank, who attributed apparent red state ingratitude to the exploitation of social issues by Republicans in his book What’s the Matter with Kansas? 

In addition Mr. Krugman cites evidence suggesting large percentages of Social Security and Medicare beneficiaries  are confused about their use of these government programs.  They don’t seem to think they’re getting handouts.

Maybe that’s because they’re in fact not getting handouts. 

Primaries, Public Interest and Angels

by Chidem Kurdas

The Republican primaries have been all-out fights, with a series of contenders showing strength in polls and challenging the establishment favorite Mitt Romney, only to fall back after the initial success. Newt Gingrich is the latest to rise and, after his loss in the Florida primary, presumably to fall. It is not a nice process, causing complaints of mudslinging that will continue in the coming presidential election. Pundits eager to display their wisdom call on politicians to set aside the differences and do what’s best for America.

Public choice theory tells us that politicians, like most people most of the time, tend to focus on their self interest. This view has been challenged—the recent Critical Review has several articles on the topic. 

The Führer Principle – Light

by Mario Rizzo

David Gergen has written a piece decrying the lack of leadership on the debt-deficit “crisis” and calling for a new Churchill. David Gergen, who saw no problem working for both Ronald Reagan and Bill Clinton, now teaches at the JFK School of Government at Harvard. He has a claim to being a member of the political establishment if anyone has.

This call is not confined to Gergen, however. It appears as a widely agreed-upon diagnosis in the news media, whether old or new. It is the conventional wisdom of the day.

Yet it is dangerously superficial. It completely misdiagnoses the problem before us.

Politically Feasible

by Mario Rizzo

Many years ago, the distinguished economist, William H. Hutt, wrote a pamphlet called “Politically Impossible?” He argued that economists should not seek political relevance by proposing only those policies that they perceive as politically possible, practical or feasible. They should speak truth to power, so to say, and advocate those policies that they perceive to be in the “public interest.” (Interestingly, it is often considered a key element of the economic rationality of agents to be able to distinguish the desirable from the feasible.)

Soros and Open Society in America

by Chidem Kurdas

George Soros originally intended to wind down his Open Society Foundations at the end of his life but changed his mind. This worldwide network of activist groups – to whom he has given more than $8 billion and named after Karl Popper’s classic The Open Society and Its Enemies – is to continue operating after he’s gone.

In Eastern Europe, the network helped undermine communist regimes and bring about freer societies. The main mission ascribed by Mr. Soros is to hold governments accountable in countries that lack civil institutions. It has to be a bitter irony that he sees the United States, the long-time home of many such institutions, in serious danger of ceasing to be an open society, given the increasingly manipulative and deceptive public discourse.

He was an early and aggressive backer of Barack Obama apparently in the belief that the then presidential candidate would stop the dangerous trend. Now he is disappointed.

Too Much Aid Will Hobble Arab Spring

by Mario Rizzo

For those who have access to the Financial Times, a must-read is the opinion piece by Saifedean Ammous. Saif attended our NYU colloquium regularly during his last year as a graduate student at Columbia University. Congratulations.  See the FT online here.

Kissinger on Bismarck

by Chidem Kurdas

A man described as both great and evil, Otto von Bismarck-Schönhausen makes a fascinating study,  as Jonathan Steinberg’s Bismarck: A Life demonstrates.  Henry Kissinger reviewed this biography in the New York Times Book Review, highlighting the diplomatic and political victories the unifier of Germany won through nimble maneuvers.

The review is a bravura tribute from one practitioner of realpolitik to another. Yet a closer look at Bismarck raises doubts as to realpolitik.

While admiring Bismarck’s subtle power games, Mr. Kissinger  admits that the result lacked institutional balance and “sowed the seeds of Germany’s 20^th century tragedies.” But he takes issue with the connection Mr. Steinberg draws from Bismarck to Hitler. Kissinger points to the contrast between the two characters. “Bismarck was a rationalist, Hitler a romantic nihilist,” he writes. “Hitler left a vacuum. Bismarck left a state strong enough to overcome catastrophic defeats …”

Nevertheless, Bismarck’s actions led to those catastrophes.

Public Unions vs. the Real Underdog

by Chidem Kurdas

Wisconsin governor Scott Walker successfully made the financial case to limit collective bargaining by public unions. Not only have the unions imposed an immense burden on taxpayers, present and future, but they create bureaucratic rigidities that cause dysfunction and, in financial crunches, layoffs of promising employees.

Yet in recent weeks it has become noticeable that these points fail to persuade many Americans.  The Wisconsin bill that just passed and similar reforms in other states face furious opposition, including appeals to the public.  Perhaps it’s not a bad idea to highlight another aspect of government unions, in addition to the purely economic issues.

We need to understand why part of the public supports unions. The best explanation that I’ve seen is from Richard Epstein in Free Markets Under Siege, a 2005 book that analyzes unions and agricultural price supports as examples of cartels in different markets.  These cartels impose social costs and require special dispensation from antitrust law. Why did the rest of the population accept the costs?  “Never underestimate the enhanced political sympathy when the underdog seeks to gain state power,” Professor Epstein points out.

Egypt Best Case Scenario via Korea

By Young Back Choi and Chidem Kurdas

Compared to the turmoil in the Middle East, South Korea appears to be an oasis of calm. But as recently as 20 or so years ago you could  still smell tear gas on the streets of Seoul. Violent demonstrations shook the city for decades—-making it look like Cairo today.

Despite continuing tensions with North Korea, Seoul is now relatively peaceful and the economy is humming along. How did South Korea get out of the cycle of angry protests and government repression? 

Voters’ Best Interest

by Chidem Kurdas

Ronald Dworkin, a well-known legal scholar, describes last month’s election results as depressing and puzzling. In a commentary in the New York Review of Books, he asks, “Why do so many Americans insist on voting against their own best interests?”