Category Archives: Misunderstood

Three Misunderstandings About Guns and the Constitution

March 5, 2018 – 8:50 am

I. Armed civilians and tyranny

What’s misunderstood about it. One common argument in favor of private ownership of military-style weapons like the AR-15 is that a well-armed population is a necessary defense against tyranny, i.e., that the general population needs to retain the ability to overthrow the central government by military force. Ted Cruz has written that the Second Amendment serves as “the ultimate check against government tyranny — for the protection of freedom.”

A parallel argument is that historically, dictators like Hitler disarmed the public before imposing full tyranny. Once disarmed, the argument goes, the people were as helpless as sheep. This Facebook meme is typical, and features typically misleading quotes.

Both quotes are doctored.

What’s wrong with that view? Just about everything.

Let’s start with Hitler. Salon’s Alex Seitz-Wald debunks “The Hitler Gun-Control Lie“, leaning on a more scholarly article by historian Bernard Harcourt. The 1938 gun law that NRA voices like Wayne LaPierre so often cite actually weakened the gun-control laws of the Weimar Republic.

The 1938 law signed by Hitler that LaPierre mentions in his book basically does the opposite of what he says it did. “The 1938 revisions completely deregulated the acquisition and transfer of rifles and shotguns, as well as ammunition,” Harcourt wrote. Meanwhile, many more categories of people, including Nazi party members, were exempted from gun ownership regulations altogether, while the legal age of purchase was lowered from 20 to 18, and permit lengths were extended from one year to three years.

The Hitler quote in the illustration refers not to German civilians, but to non-Aryans in occupied Russian territory. Obviously, he would not have referred to himself as a “conqueror” of the German nation, or to the Nazi master race as a “subjected people”.

If the NRA’s point were valid, you would expect the most democratic nations in the world to be the ones with the most guns, but if anything, the correlation runs in the opposite direction. Here are the four most democratic nations, according to the UK-based Economist Intelligence Unit.

Nation democracy index guns per 100 civilians
Norway 9.87 31.3
Iceland 9.58 30.3
Sweden 9.39 21
New Zealand 9.26 22.6

Even these gun-ownership numbers, I suspect, are exaggerated in comparison with the U.S., since they probably include very few weapons like the AR-15. (Norway’s parliament is reportedly ready to pass a complete ban on semi-automatic weapons, which would include a number of popular handguns as well as rifles.)

Here are the nations with the most guns in civilian hands.

Nation democracy index guns per 100 civilians
United States 7.98 101
Serbia 6.41 58.21
Yemen 2.07 54.8
Cyprus 7.59 36.4

Of particular note is Japan, where the average 100 civilians own a mere 0.6 guns, but whose democracy index on a par with the U.S.: 7.88. If a disarmed population is just asking for a totalitarian takeover, why isn’t one happening in Japan?

Switzerland and Israel are frequently cited as democratic countries with a large number of guns and little civilian gun violence, but in both countries possession of a gun is associated with military service, and is strongly regulated otherwise. The BBC quotes a Swiss gun-owner, who does not keep ammunition in his house and stores his gun’s barrel in a separate part of the house from its body:

The gun is not given to me to protect me or my family. I have been given this gun by my country to serve my country.

Finally, there are those quotes from the Founding Fathers like the one in the illustration above, nearly all of which have been either taken out of context, mis-attributed, or simply invented out of nothing. The Jefferson quote above is rejected on the official Monticello web site. Other frequently-cited fake quotes from the Founders are debunked at Guncite.com.

II. The original intent of the Second Amendment.

What’s misunderstood about it. It’s believed that the Founders passed the Second Amendment to protect an individual right to own militarily useful weapons (like, in our era, the AR-15), so that the People would have the ability to resist a tyrannical federal government.

What more people need to understand. That belief is historically baseless.

Legally, it doesn’t matter whether privately-owned weapons actually deter tyranny or not. (They don’t.) If the Founders believed they did, and wrote that belief into the Second Amendment, and if no generation since has seen fit to repeal it, then it’s the law. But that’s not what the Second Amendment is about at all.

At this point it’s worthwhile to look at the full text of the Amendment, which is short.

A well regulated Militia being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

Militiaman.

Today, we often tend to read right past the first clause and focus on the second. But it’s worth remembering what the Founders thought of when they saw the word militia: the Minutemen. In other words, a force of citizen-soldiers authorized by state or local governments, which could be called into action in a crisis. The current-day successor to the federal-era militias is the National Guard, not the self-appointed sovereign-citizen yahoos who drill up in the woods of Montana. The Constitution makes that quite clear in Article I, Section 8.

The Congress shall have Power … To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress.

The so-called militias we hear about today refuse to be organized, armed, or disciplined by Congress, or to be trained or have their officers appointed the states. So they’re not at all what the Constitution is talking about.

Not a militiaman.

Why, then, was a well-regulated militia “necessary to the security of a free State”? Not so that it could fight against the federal government. In fact, Article I, Section 8 also explicitly gives Congress the power “to provide for calling forth the Militia”, which will then (Article II, Section 2) be under the command of the President. In case of insurrection, the Constitution foresees the militia fighting for the federal government, not against it.

The vision that worried the founding generation (enough to create the Second Amendment) was that the federal government might disband the militias and replace them with a large professional standing army, which would then need to have forts and bases throughout the country. Rather than repel an Indian raid itself, for example, a frontier community would have to call for help from the Army. Slave-owning states particularly worried about the possibility of an anti-slavery president refusing to put down a slave uprising (or maybe just dragging his feet). They wanted to be sure they would retain enough local power to keep their slaves under control.

Even more, the Founders feared that professional soldiers would grow to be loyal to their Commander in Chief rather than to the nation. The existence of this force might tempt a president to launch a coup and establish a military dictatorship. The point of a militia was to make that large permanent professional force unnecessary, not to fight pitched battles against it.

You can argue that we’ve already gone a long way down the road the Founders didn’t want us to travel: We have a large standing army with nationwide bases, and towns do not drill their citizens on the town green, as Lexington and Concord did. (However, we also have state and local police departments  — which didn’t exist in the Founding era — so we’re not entirely dependent on the federal government for our security.) But self-appointed Rambos arming themselves to resist the federal government was no part of the Founders’ vision. The whole point of the Constitutional system was to allow for peaceful replacement of an unpopular government. As the Supreme Court wrote in 1951:

Whatever theoretical merit there may be to the argument that there is a “right” to rebellion against dictatorial governments is without force where the existing structure of the government provides for peaceful and orderly change.

III. The weapons the Second Amendment protects.

What’s misunderstood about it. Some Americans see virtually any restriction on the weapons they can own, or even registration of those weapons, as a violation of their Second Amendment rights.

What’s wrong with that? In the entire history of the United States, no court has understood the Second Amendment that way.

Given that the Second Amendment was part of the Bill of Rights passed by the first Congress, you’d expect all its major provisions to have a long history of judicial interpretation. But in fact the individual right to own specific weapons wasn’t recognized until the 2008 Heller case, a hotly contested 5-4 decision of the Supreme Court. Prior to that, courts construed the Amendment’s “right to bear arms” as a collective right belonging to “the People” as a whole, not individual persons. Historian Michael Waldman wrote:

“A fraud on the American public.” That’s how former Chief Justice Warren Burger described the idea that the Second Amendment gives an unfettered individual right to a gun. When he spoke these words to PBS in 1990, the rock-ribbed conservative appointed by Richard Nixon was expressing the longtime consensus of historians and judges across the political spectrum.

Until Heller, the Supreme Court’s landmark gun-rights case was Miller, in which it rejected the argument that the National Firearms Act (regulating sawed-off shotguns, among other weapons) violated constitutional rights. Even the Heller decision (written by the late Justice Antonin Scalia) doesn’t endorse the NRA’s view of the Second Amendment. It struck down a District of Columbia law banning handguns, while allowing that

Like most rights, the Second Amendment right is not unlimited. It is not a right to keep and carry any weapon whatsoever in any manner whatsoever and for whatever purpose.

Challenges to the Federal Assault Weapons Ban that was in force from 1994 to 2004 never made it to the Supreme Court, though the law was upheld by lower courts.

What today’s Court would do with an assault-weapons ban, or even a complete ban on semi-automatic weapons, is very much up in the air. Scalia’s Heller opinion found an expectation that the militia would assemble carrying weapons “in common use at the time” for legal purposes. How extensive that use needs to be was not specified. Whether AR-15s and other assault weapons are “in common use” would no doubt be hotly debated. Certainly they are not as widely used as handguns were in 2008, and the main legal purpose for which handguns were used (self-defense) carries more constitutional weight than the nebulous legal uses of assault weapons.

No court decision anywhere invalidates the government’s legitimate power to register weapons.

No court has rejected the federal ban on automatic weapons or the regulation of high explosives, so there is clearly a line somewhere between weapons that can and can’t be banned. The question would be which side AR-15s fall on.

Just to give one obvious example, it would be incredibly stupid for the government to allow people who live on the flight paths of major airports to own surface-to-air missiles. And yet, the argument that individuals have to be prepared to fight a tyrannical government would seem to justify those weapons. (How are we going to resist the government if we can’t take down its air power?) Those who believe the resist-the-government interpretation of the Second Amendment should be pushed to say whether any weapons can be banned or regulated, and why exactly such limitations are consistent with their theory.

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Does the Exploding Federal Deficit Matter?

February 12, 2018 – 8:58 am

Republicans claimed that Obama’s deficits were apocalyptic, but trillion-dollar deficits are fine now that Trump is president. What’s the right level of concern?

In his 2008 stump speech, John McCain used to say that accusing Congress of spending money like a drunken sailor was an insult to drunken sailors. McCain is an old Navy man, the son and grandson of admirals, so he was particularly well positioned to take offense. The line usually got a good laugh.

Out-of-control debt and spending was a standard Republican complaint all through the Obama years. The Tea Party’s original claim to being non-partisan was that they also accused the Bush administration of being wild spenders, abetted by K-Street establishment Republicans as well as Democrats. For almost a decade now, Republicans of all stripes have railed against the deficit. Some dark curse would steal away our economic growth, their economists’ spreadsheet errors told us, if the total national debt ever got close to the annual GDP. As a result, Obama’s budgets turned into an annual game of chicken, the second round of stimulus spending never happened, infrastructure continued to decay, and we were stuck with a sluggish economy that didn’t get unemployment back under 5% until 2016.

But then the Electoral College appointed Trump president, and now the Bush days are back again: Deficits don’t matter. We can cut taxes and raise spending and everything should be fine (until the next Democratic president takes office, at which time the party will be over and the national debt will once again be an existential threat to the Republic). So Obama cut his inherited deficit in half, while Trump is in the process of pushing it back up again. The latest estimate of the FY 2019 deficit is $1.2 trillion, possibly rising to over $2 trillion by 2027. [1] And that doesn’t count the infrastructure plan that Trump plans to release today.

That’s been the pattern since Ronald Reagan: Republicans blow up the deficit, and then pressure Democrats to deal with it — which they’ve done. Presidents are inaugurated in January, inheriting a budget that started in October. Together, Clinton and Obama shaved more than a trillion dollars off the deficits of their entering year. But that was no match for the $1.7 trillion that Reagan and the two Bushes added to their entering deficits.

President entering deficit exiting deficit change
Trump -666 ??? ???
Obama -1413 -666 +747
Bush II +128 -1413 -1541
Clinton -255 +128 +383
Bush I -153 -255 -102
Reagan -79 -153 -74

(Numbers from thebalance.com. Negative numbers are deficits, the lone positive number a surplus.)

The GOP has never owned up to that pattern in its rhetoric, though. As Reagan was entering office, he scolded Congress about runaway debt.

Can we, who man the ship of state, deny it is somewhat out of control? Our national debt is approaching $1 trillion. A few weeks ago I called such a figure, a trillion dollars, incomprehensible, and I’ve been trying ever since to think of a way to illustrate how big a trillion really is. And the best I could come up with is that if you had a stack of thousand-dollar bills in your hand only 4 inches high, you’d be a millionaire. A trillion dollars would be a stack of thousand-dollar bills 67 miles high. The interest on the public debt this year we know will be over $90 billion, and unless we change the proposed spending for the fiscal year beginning October 1st, we’ll add another almost $80 billion to the debt.

So what did he do? He cut taxes, raised defense spending, and never ran an annual deficit less than $100 billion, peaking at $221 billion in FY 1986. In total, he added another $1.4 trillion to the national debt.

Trump is following the same script. In the short run, it’s good politics. Everybody likes a tax cut. If the increased spending means that the defense industry in your area starts hiring again, your local highways get resurfaced, or you don’t have to deal with cuts in Medicare, Social Security, CHIP, or whatever other government program your family relies on, then you’re happy. Compared to something immediate and personal, like whether you have a job or your kids can get the medical treatment they need, the federal deficit seems like an abstract, remote problem.

And yet, it’s hard to escape the nagging feeling that we can’t get something for nothing. If the government keeps spending and stops collecting taxes, it seems like something bad ought to happen eventually. But what?

Bad analogies. One problem we have in thinking about this question is that our national conversation about debt has been polluted by a really bad metaphor: The government’s budget is like your household budget.

The deficits-are-good-politics part of that analogy works. If you’re the budgeter in your household, and you suddenly decide that running up a big debt is no big deal, you can make everybody pretty happy for a while. The kids can get the Christmas presents they want. When nobody feels like cooking, the family can eat at a nice restaurant. That big vacation you’ve dreamed about can happen this summer rather than sometime in the indefinite future. If the job is getting to be too big a hassle, your spouse can just quit. It’s all good.

Until it’s not. Eventually, the household metaphor tells us, the bills will have to be paid, and then bankruptcy looms. And that’s where the analogy breaks down. Your household spending spree can’t go on forever, but it wouldn’t have to end if your bank simply cashed all your checks and never bothered you about the fact that your account is deep in the red. That’s the situation the U.S. government is in: The bank is the Federal Reserve, and it can (and will) simply honor all the checks the government writes.

Pushing the household analogy further, you might ask: But what happens when the bank runs out of money? In the case of the Fed, that can’t happen, because dollars are whatever the Fed says they are. For example, one of the ways the Fed dealt with the financial crisis that began in 2007 is called quantitative easing, which is defined like this:

Quantitative easing is a massive expansion of the open market operations of a central bank. It’s used to stimulate the economy by making it easier for businesses to borrow money. The bank buys securities from its member banks to add liquidity to capital markets. This has the same effect as increasing the money supply. In return, the central bank issues credit to the banks’ reserves to buy the securities. Where do central banks get the credit to purchase these assets? They simply create it out of thin air. Only central banks have this unique power.

Several countries’ central banks did this, but none more aggressively than the Fed, which created $2 trillion just by typing some numbers into its central computers. Since there’s no limit to the number of dollars the Fed can create this way, it can buy as many bonds as Congress wants to authorize. So there’s no limit to what the U.S. government can spend.

Consequently, anybody who talks about the U.S. government going bankrupt is just being hyperbolic. The government can refuse to cover its debts (that possibility is what the debt-ceiling crises of 2011 and 2013 were about), but it can’t be forced into bankruptcy. [2]

So what really goes wrong? You know something has to, because otherwise the government could just make us all rich.

The government’s debt gets financed in two different ways, and they correspond to the two things that can go wrong: high interest rates and inflation.

One way the debt gets financed is that investors buy government bonds. You may own some yourself, and if you have a 401k, probably some of that money is invested in mutual funds that own some government bonds. Banks or corporations with extra cash may hold it in the form of government bonds.

Investors like U.S. treasury bonds because they pay interest. But like every other market, the market for treasury bonds works by supply and demand. If the supply of bonds zooms up (because the government is borrowing more money), they won’t all get bought unless something attracts more investors. In this case, the “something” is higher interest rates. The more the government needs to borrow from investors, the higher the interest rate it will have to pay.

Since the U.S. government can’t go bankrupt, investors would rather loan to it than to just about anybody else. So the only way you or Bill Gates or General Motors can get a loan is to pay more interest rate than the going rate on treasury bonds. So the government borrowing more money can result in everybody paying higher interest rates: Your mortgage rate goes up, your credit-card rate goes up, businesses that want to borrow money to expand have to pay higher interest rates, and so on. If interest rates get high enough, people and businesses will stop borrowing, the ones who can’t cover the higher interest payments will go bankrupt, and the economy will fall into a recession.

The 50-billion-mark note of 1923.

The other way the government deficit gets financed is that the Fed can buy the bonds itself, creating dollars out of thin air to do so. This is the modern-day analog of governments paying their bills by printing money, and it can have the same result as when the German government printed money in the 1920s: inflation. It makes sense: dollars are part of a supply-and-demand system too, so increasing the number of dollars should decrease how much each of them can buy. [3]

Except … Notice that I keep using words like can and should. What makes economics such a hard subject is that simple reasoning like this doesn’t always pan out. Sometimes when the Fed creates more money, the economy just soaks it up. If the economy has unused capacity — if, say, there are idle mines and factories, and unemployed workers who want jobs — the extra money might just bring all that back to life. If more people start working and spending, producing and consuming more goods and services, then the normal function of the economy requires more money. So the money the Fed creates might not cause inflation. And if investors are having trouble finding attractive alternative investments — as they do when economic prospects are iffy for everybody — they might be happy to loan the government more money without a higher interest rate.

In other words, sometimes there really is a free lunch. The government can borrow more money, make a bunch of people happy, and nothing bad happens.

That’s how things played out during the Obama years (and also during Reagan’s administration). The national debt went up substantially, the Fed created trillions of dollars, and yet both interest rates and inflation stayed low. (In Reagan’s case, interest rates were at record highs when he came into office, and went down from there.) Conservative deficit hawks kept predicting that the sky was about to fall on us, but it didn’t. [4]

What about now? The reason we got away with running such big deficits during the Obama years was that the economy was in really bad shape when he took office in 2009. Left to its own devices, the economy looked likely to go into a deflationary cycle, where money stops circulating and suddenly no one can pay their debts: Businesses go bankrupt, so workers lose their jobs and creditors don’t get paid. That causes them to go bankrupt, and the whole vicious cycle builds on itself.

Classic Keynesian economic theory says that the government should run deficits during busts and surpluses during booms. [5] That way the overall debt stays under control and the economy grows without violent swings up and down. That’s what the record $1.4 trillion deficit in FY 2009 (the Bush/Obama transition year) was for: It provided some inflationary pressure to balance the deflationary pressure of the Great Recession. The government played its Keynesian role as the spender of last resort, and so money kept flowing. Without that stimulus, things could have been much worse.

But the situation right now is very different. For the last several months, the unemployment rate has been 4.1%, the lowest it has been since the Goldilocks years of the Clinton administration. We’ve never run a trillion-dollar deficit during a time of economic growth and low unemployment, but we’re about to.

In this situation, we’re unlikely to get the free lunch. The free lunch happens because productive capacity is just sitting there, waiting for new money to bring it to life. If you need more workers, you don’t have to hire them away from somebody else, you can hire them off the unemployment line. When a business increases its orders, its suppliers don’t have to build new plants or pay overtime, they just start running their factories on their regular schedules rather than at a reduced rate.

When the economy is already humming, though, all the increased inputs come at a higher cost. Somewhere there are going to be bottlenecks, places where supply can’t be increased easily, and so that limited supply will go to the highest bidder at an increased cost. Those price increases ripple through the system, and you have inflation.

Inflation hasn’t shown up yet, though interest rates have already started to rise. Back in September, when passing a tax cut still seemed unlikely, rates on the 10-year treasury bond were barely over 2%. Now they’re a little under 3%. The stock market doesn’t submit to interviews, so no one can say exactly why the Dow Jones Index dropped 2800 points in 9 business days. But traders are often citing worries about inflation and interest rates.

Only hindsight will be able to tell us whether the markets are over-reacting. But there is a limit to how much debt the government can pile up without bringing on inflation and high interest rates. We just don’t know what it is.

[1] The last $400 billion on that estimate (the white box in the chart) comes from two temporary changes that Republicans assure us they intend to be permanent: the part of the recent tax bill that benefits individuals and some taxes that were part of the Affordable Care Act that have since be delayed. So Republicans can claim the deficit will only (!) be $1.7 trillion in 2027 if they admit that the long-term tax cut was really just intended for corporations.

[2] Somebody out there is asking: “What about Greece?” During the last decade, the Greek government has had a series of major financial crises that revolved around not being able to finance its national debt. Why won’t that happen to us?

The difference is that Greece doesn’t have a true central bank that controls its own currency. Greece is part of the euro-zone, so when it runs a deficit, it needs to borrow euros. Euros are controlled by the European Central Bank, a pan-European institution that feels no obligation to buy the Greek government’s bonds.

[3] That’s what goes wrong with the government making us all millionaires. The first thing you’d probably do if you became a millionaire is hire somebody to do some cleaning. But the people you’d be trying to hire are now millionaires too, so they’re not going to work for the same rate you’d have paid them before.

In addition to what I’ve described, inflation and interest rates can also interact: If investors expect the dollars they’ll be repaid in the future to be worth less than the dollars they’re loaning out now, they’ll want a higher interest rate to make up the difference. The value of the dollar in other currencies also comes into play: Inflation pushes the value of the dollar down, while higher interest rates prop it up. Things get complicated.

[4] The showdown that led to the 2011 debt-ceiling crisis was foreshadowed by Paul Ryan’s report “The Path to Prosperity“, which called for drastic reductions in government spending.

Government at all levels is mired in debt. Mismanagement and overspending have left the nation on the brink of bankruptcy.
The cause for Ryan’s alarm was the $1.2 trillion deficit in Obama’s proposed FY 2012 budget. That’s virtually identical to the FY 2019 deficit Ryan has voted for.

[5] In 1937, John Maynard Keynes wrote: “The boom, not the slump, is the right time for austerity at the Treasury.” In actual practice, we’ve usually run big deficits during busts and smaller deficits during booms. But the overall principle is the same.

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Misunderstood Things: 10-9-2017

October 9, 2017 – 9:00 am

This week: gun deaths and tax simplification.

I. Gun deaths.

What’s misunderstood about them: Victims of mass shootings are not the typical gun deaths.

What more people should know: If you’re quoting gun-death totals, you’re mostly talking about suicides, domestic violence, turf battles between gangs, and arguments that spin out of control — not Las Vegas type massacres.

*

The United States has more guns (1.12 guns per resident, nearly twice as many as the next highest countries — which are Serbia and Yemen, not nations we usually compare ourselves to) and more gun deaths (averaging 33,367 per year from 1999-2015) than any other country in the world. We also have more spectacular mass shootings (like the recent Las Vegas massacre) than any other country.

Mass shootings make headlines and start us wondering why our country is this way. They also make us afraid in ways that other gun deaths don’t. I know I have been in crowds that gathered in urban areas near tall buildings, like the country music festival in Las Vegas. What if someone had started shooting from above? What could I have done?

But as so often happens, the spectacular event that focuses our fears is very far from the typical event captured by our statistics. The majority of gun deaths, for example, are actually suicides (21,175  in 2013). Gun homicides average a little over 12,000 per year.

Of the homicides, a large number are domestic violence or some other family dispute. (That’s why detectives on TV always check the spouse’s alibi first.) Some escalate from arguments between acquaintances, some are gang-related, and others are incidental to armed robbery or some other crime.

Mass-shooting victims are simultaneously a horrifyingly large number of people and a comparatively small percentage of fatal shootings. The Washington Post went back half a century and used a tighter-than-usual definition to collect mass shootings since: They counted “four or more people were killed by a lone shooter (or two shooters in three cases)” and not “gang killings, shootings that began as other crimes such as robberies, and killings that involved only the shooter’s family.” That gave them 131 events and 948 deaths since the University of Texas sniper in 1966.

Using a looser definition (four-or-more injured or killed, including the types of shootings the WaPo filtered out) The New York Times reported 585 people killed in 521 incidents in about a year and a third — still less than 1.5% of the gun deaths during that period.

So: 58 people killed in an hour or so by a single shooter in Las Vegas, and 33,000 gun deaths year after year. They’re both evidence that the United States has a sick relationship with guns, but they’re very different facts that point to very different problems. Short of drastically lowering the number of guns, solutions to one of those problems isn’t likely to do much about the other.

II. Tax simplification

What’s misunderstood about it: What makes figuring your income tax so complicated.

What more people should know: Reducing the number of tax brackets doesn’t simplify the process in the slightest. Whether the IRS defines one bracket or a hundred, filling out your 1040 will require the same amount of time and effort.

*

No one knows exactly how much time taxpayers spend on IRS forms, but estimates run into the billions of hours each year. In addition, we spend billions of dollars paying professionals to compute our taxes for us. So it’s not surprising that every tax reform is sold to the voters as a simplification, sometimes promising that you’ll be able to send the IRS just a postcard rather than a heavy envelope full of filled-out forms.

Invariably, someone claims that taxes would be simpler if they were flatter, i.e., if there weren’t different tax brackets taxed at different rates. While the current Trump administration proposal doesn’t go all the way to a flat tax (one bracket), it does reduce the number of brackets from seven to three. But if you’re hoping that change will make April 15 less stressful, you’re out of luck.

The easiest way to see the problem is to get out last year’s 1040 (or a blank 1040 form) and ask yourself: Where did the number of brackets make any difference? Well, not on the first page, which is all about your sources of income, not how it’s taxed. In fact, the form is all about income until you eventually arrive at Line 43: Taxable income.

Right under that is Line 44: Tax. What magic happened between 43 and 44? If you’re like most people, you took the number on Line 43 and used it to look up how much tax you owe on the Tax Tables in the Instructions. That’s the only place where the number of brackets mattered. Changing the number of brackets, or even the rates that each bracket pays, changes the numbers in the Tax Tables. That’s it.

Taxes are complicated for two reasons, neither of which has anything to do with whether the tax rates are flat or progressive (i.e., applying higher tax rates as you make more and more money).

  • Different kinds of income are taxed differently, so you have to separately keep track of wages, dividends (qualified and unqualified), capital gains (long-term and short), interest (taxable and non-taxable), and do different things with each of them. One of the trickier parts of my tax return isn’t sent to the IRS at all; it’s the Qualified Dividends and Capital Gains Worksheet.*
  • The government chooses to subsidize certain pro-social activities (buying a house, giving to charity, saving for retirement, etc.) through the tax code (as deductions), rather than by direct subsidies. This method favors rich people, who — since they’re paying a higher rate — get more money back from their deduction than you do. Every deduction you claim has its own form, where you establish that you really did the thing that you’re claiming a deduction for.

So eliminating deductions and taxing all forms of income the same way (not all levels of income at the same rate) really would cut the amount of time you spend filling out your taxes (even if it’s just the time spent understanding what tax-exempt interest is and realizing you didn’t receive any). The Trump proposal claims to be eliminating deductions, but hasn’t specified any yet, so we don’t know yet if it will be simpler in any material way.

Flattening the tax rates doesn’t simplify anything; it just redistributes the tax burden away from the rich and onto the middle class. (That’s the point of it, but they can’t exactly say so in public.)

So why don’t tax-reform proposals focus on these actual time-savers? That’s easy: (1) eliminating deductions doesn’t sound as good because it’s taking something away from you, and (2) rich people want to continue paying lower rates on their non-wage income.

You know what would make things much, much simpler for the vast majority of taxpayers? An awful lot of the 1040 and its lettered schedules are devoted to telling the IRS things it already knows: Your employer has already reported your wages, your bank has reported the interest your savings earned, and so on. You waste a lot of time copying numbers off of W-2 and 1099 forms that the IRS already has.

The IRS could send you a form with all that information already included, and with the tax you owe already figured (assuming the standard deduction). If you think they got something wrong, you have other income to report (like your poker winnings — very important if you don’t want to end up like Al Capone, who was convicted of having a lifestyle his reported income couldn’t support), or you want to itemize your deductions, you could file just that part of a tax return. Otherwise, you send or cash a check and you’re done.

Other countries do this, and it really is simpler. The reason we don’t is that (in spite of their rhetoric) conservatives don’t want your taxes to be simple. They want to keep the public in a perpetual state of agitation against the IRS, which they can turn into support for “simplifications” like a flat tax that favors the rich.

* That worksheet is what makes me skeptical of those file-on-a-postcard proposals. (I examined Ted Cruz’ postcard back in 2015, in a note about the Republican debate. It wasn’t actually simpler.) We could all file on postcards now, if the details were pushed off to worksheets that we don’t send in to the IRS, but have to be able to produce if we’re audited. But the calculations would be the same.

By weeklysift | Comments (7)

Three Misunderstood Things 7-24-2017

July 24, 2017 – 10:16 am

This week: census, environmental regulations, coal jobs

I. The census

What’s misunderstood about it: How can counting people be a partisan issue?

What more people should know: A lot rides on the census. The Census Bureau knows it gets the answers wrong, but Republicans have a partisan interest in not letting it do better. In 2020, it’s being set up to fail.

*

When the Founders wrote the Constitution, they knew the country was changing fast. New people were pouring into America — some coming by choice and others by force. If Congress was going to represent these people into the distant future, it would have to change as the country changed. So somebody would have to keep track of how the country was changing. That’s why Article I, Section 2 says:

The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct.

Congress has implemented that clause by setting up the Census Bureau, which tries to count everyone in America in each year that ends in a zero. You can look at this as a rolling peaceful revolution: Via the census, states like Virginia and Massachusetts have gradually surrendered their founding-era power to new states like California and Texas.

No doubt you learned in grade school that counting is an objective process that produces a correct answer — the same one for everybody who knows how to count. But in practice, when a bunch of people count to 325 million, agreement starts to break down. Now imagine that you’re counting a field full of 325 million cats, most running around and jumping over each other, and a few actively hiding from you. How do you come up with an answer you have faith in?

That’s the Census Bureau’s fundamental problem: Americans won’t stand still long enough to be counted, and some are actively suspicious of anybody from the government who comes around asking questions. Inevitably, then, not everybody gets counted, and some people get counted more than once. This is not a secret; the Census Bureau admits that it gets the wrong answer.

That might not be so bad if the errors were random, but they’re not. Basically, the more stable your life is, the more likely you are to be counted correctly. If, for example, you’re still living in the same house with the same people that a census worker counted ten years ago, they’re going to count you again. But if you’re sleeping on your friend’s couch for a few weeks while you’re waiting for a job to turn up, and thinking about moving back in with Mom if you can’t find one, then you might get missed.

Stability isn’t a randomly distributed quality. The LA Times spells it out:

The last census was considered successful — that is, the 2010 results were considered to be within an acceptable margin of error. But by the Census Bureau’s own estimates, it omitted 2.1% of African Americans, 1.5% of Latinos and nearly 5% of reservation-dwelling American Indians, while non-Latino whites were overcounted by almost 1%. The census missed about 7% of African American and Latino children 4 or younger, a rate twice as high as the overall average for young children.

But that raises an epistemological question: How do you know your count is wrong if you don’t have a correct count to compare it to? And if you have that correct count, why not just use it?

The answer to the first question is statistics. Imagine, for example, that you’re trying to count all the species that live in your back yard. You go out one day and count 50. Then you go out longer with a bigger magnifying glass and find 10 more. Then the next couple of times you don’t find anything new. But then you find two. Are you confident that’s all of them now? What’s your best guess about how many are really out there?

Now extend that to every yard in the neighborhood. Imagine that after each household does its own count, you all converge on one yard for a more intensive search than you’d be willing to do on every yard. That search finds even more new species. Now how many do you think you missed in the other yards?

Statisticians have thought long and hard about questions like that, and have a variety of well-tested ways to estimate the number of things that haven’t been found yet. If you apply those techniques to the census, you get more accurate estimates of the total.

So why not just use those estimates? Two reasons:

  • It sounds bad: Ivory-tower eggheads are using a bunch of mumbo-jumbo Real Americans can’t understand to invent a bunch of blacks and Hispanics that nobody has ever seen.
  • Republicans have a partisan interest in keeping the count the way it is.

The Census determines two very important things: how many representatives (and electoral votes) each state gets, and how hundreds of billions of dollars in federal money for programs like Medicaid and highway-building get distributed among the states. The miscount gives more power and money to mostly white (and Republican) states like Wyoming and Kansas, and less to a majority non-white (and Democratic) state like California. Within a state, Republican gerrymandering works by crowding Democratic-leaning urban minorities into a few districts, leaving a bunch of safely Republican rural and suburban districts. That minority-packing is even easier to do if a chunk of those people were never counted to begin with.

The 2020 census is already headed for trouble. The Census Bureau is being underfunded, taking no account of the fact that it has more people to count than last time. Plans to modernize its technology went badly. And it is currently leaderless: The bureau chief resigned at the end of June, and Trump has nominated no one to replace him.

So we’re set up for an even bigger uncount of minorities this year. And that’s got to make Paul Ryan happy.

II. Environmental regulations

What’s misunderstand about it: Many people believe that a clean environment is a costly luxury.

What more people should understand: Externalities. That’s how well-designed environmental regulations can save more money than they cost.

*

Nobody should come out of Econ 101 without an understanding externalities — real economic costs that the market doesn’t see because they aren’t borne by either the buyer or the seller.

Pollution is the classic example: Suppose I run a paper mill, and I use large quantities of chlorine to make my paper nice and white. At the end of the process I dump the chlorine into my local river, because that’s the cheapest way for me to get rid of it. Because I use such an inexpensive (for me) disposal process, I can keep my prices low. That makes me happy and my customers happy, so the market is happy too. Any of my competitors who doesn’t dump his chlorine in the river is going to be at a disadvantage.

The problems in this process only accrue to people who live downstream, especially fishermen and anybody who wants to swim or eat fish. They suffer real economic losses — losses that are probably much bigger than what I save. But since their loss is invisible to the paper market, nothing will change without the some outside-the-market action — like a government regulation, a court order, or a mob of fishermen coming to burn down my mill.

Now suppose the government tells me I have to stop dumping chlorine. I have to find either some environmentally friendly paper-whitening technique or a way to treat my chlorine-tainted wastewater until it’s safe to put back into the river. Either solution will cost me money, and I will have no trouble calculating exactly how much. So you can bet there will be an article in my local newspaper (which now has to pay more for the newsprint it buys from me) about how many millions of dollars these new regulations cost. The corresponding gains by fishermen, riverfront resort owners whose properties no longer stink, and downstream towns that don’t have to get the chlorine out of their drinking water — that’s all much more diffuse and hard to quantify. So the newspaper won’t have any precise number to weigh my cost against. Chances are its readers will see the issue as money vs. quality of life. They won’t realize that the regulations also make sense in purely economic terms.

That’s an abstract and somewhat dated example, but similar issues — and similar news stories — appear all the time. The costs of new regulations are borne by specific industries who can calculate them exactly, while the benefits — though very real — are more diffuse, and may accrue to people who don’t even realize they’re benefiting. (Companies are very aware of what they’ll have to spend to take carcinogens out of their products, but nobody ever knows about the cancers they don’t get.) But that doesn’t mean that the benefits aren’t bigger than the costs, even in dollar terms.

The best example from my lifetime is getting the lead out of gasoline. If you were alive at the time, you probably remember that the new unleaded gasoline cost a few cents more per gallon. Spread over the whole economy, that amounted to billions and billions. What we got out of that, though, was far more than just the vague satisfaction of breathing cleaner air. Without so much lead in their bloodstreams, our children are smarter, less violent, and less impulsive. The gains — even in purely material terms — have been overwhelmingly positive.

III. Coal jobs.

What’s misunderstood about it: What happened to them? Environmentalists are often blamed for destroying these jobs.

What more people should know: No doubt environmentalists would kill the coal industry if they could. But the real destroyers of coal jobs are automation and competition from other fuels.

*

Coal miners are the heroes of one of the classic success stories of the 20th century. Mining was originally a job for the desperate and expendable, but miners were among the first American workers to see the benefits of unionization. Year after year, coal mining became safer [1], less debilitating, and better paying, until by the 1960s a miner no longer “owed his soul to the company store“, but could be the breadwinner of a middle-class family, owning a home, driving a nice car or truck, and even sending his children to college. Sons and daughters of miners could become doctors, lawyers, or business executives. Or if they wanted to follow their fathers into the mines, that promised to be a good life too.

However, the total number of coal-mining jobs in the United States peaked in 1923.

Was that because Americans stopped using coal? Not at all. Coal production kept going up for the next 85 years.

The difference was automation. Mines employed three-quarters of a million men in the pick-and-shovel days, but better tools allow 21st-century mines to produce more coal with far fewer workers.

If you take a closer look at that employment graph, you’ll notice a hump in the 1970s, when coal employment staged a brief comeback. That corresponded to the Arab Oil Embargo of 1973 and the increased oil prices of the OPEC era. For decades after that, coal was the cheaper, more reliable energy source. Americans who dreamed of energy independence dreamed of coal. In a 1980 presidential debate, candidate Ronald Reagan said:

This nation has been portrayed for too long a time to the people as being energy-poor, when it is energy-rich. The coal that the President [Carter] mentioned — yes, we have it, and yet 1/8th of our total coal resources is not being utilized at all right now. The mines are closed down. There are 22,000 miners out of work. Most of this is due to regulation.

However, all that changed with the fracking boom. Depending on market fluctuations, natural gas can be the cheaper fuel. Meanwhile, the price-per-watt of renewable energy is falling fast, and is now competitive with coal for some applications. So if a utility started building a new coal-fueled plant now, by the time it came on line a renewable source might be more economical — even without considering possible carbon taxes or environmental regulations.

The dirtiness of coal is a huge externality (see misunderstanding II, above), so regulations disadvantaging it make good economic sense. Looking at the full cost to society, coal is the most expensive fuel we have, and should be phased out as soon as possible.

Statements like that make good fodder for politicians (like Trump or Reagan) who want to scapegoat environmental regulations for killing the coal industry. However, dirty coal is like the obnoxious murder victim in an Agatha Christie novel: Environmentalists are only one of the many who wanted it dead, and other suspects actually killed it.

[1] The number of coal-mining deaths peaked at 3,242 in 1907. In 2016 that number was down to 8. As a comment below notes, though, that doesn’t count deaths from black lung disease, which are on the rise again.

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Three Misunderstood Things, 7-17-2017

July 17, 2017 – 8:38 am

This week: healthcare costs, the “Biblical” view of abortion, and sanctuary cities.

I. Cutting healthcare costs.

What’s misunderstood about it: Liberals and conservatives both talk about cutting costs, but mean different things. Liberals are usually talking about cutting the cost to society as a whole, while conservatives focus on cutting the cost to the federal government. Either side might be talking about cutting the cost to certain individuals.

The right follow-up question: When a proposals claims to “cut healthcare costs”, are those costs going away, or just being passed on to someone else? Or did that money pay for some needed care that someone is now going to do without?

*

Nearly everyone agrees that American healthcare is too expensive. Americans spend far more on healthcare, both per capita and as a percentage of GDP, than any other country in the world. That might be fine if our extra money bought us better health, but in fact the reverse is true: Our life expectancy at birth is similar to much poorer countries like Costa Rica and Cuba, and on average Americans die four years sooner than the Japanese or the Swiss.

So cutting healthcare costs is a sure applause line for a politician. But what does it mean?

An win/win outcome would be to deliver the same or better care more efficiently and effectively: Hospitals make fewer mistakes and produce fewer unnecessary complications. Treatment gets targeted better, so that no one has to suffer through (or pay for) a test or treatment had no chance of helping. Drugs replace surgeries, and diet/exercise regimens replace drugs. Preventive care catches conditions before they become serious (and expensive). Environmental and job-safety and product-safety standards expose people to fewer health-threatening risks.

Admittedly, it’s not always obvious how to get those win/win results. ObamaCare made some small steps in this direction, but we really don’t know yet whether they’re working, and those changes may not survive the ObamaCare repeal process.

So most cost-cutting proposals are not about those win/win solutions. Liberals often try to offer the same treatment for less money by squeezing providers: cutting insurance companies out of the loop via single-payer plans, capping the prices that drug companies or hospitals can charge, or paying doctors less. Those are great ideas unless you’re an insurance company, a drug company, a hospital, a doctor, or a lobbyist for one of those powerful vested interests.

Conservatives often cut costs by getting somebody to do without healthcare they would otherwise want, usually rationing by cost: Everything is available if you can pay, but you might “choose” not to pursue some treatment that would bankrupt your family. Perhaps Americans (especially poor and working-class Americans) really do seek massive amounts of unnecessary treatments, and they would stop if only they had more “skin in the game“, but I haven’t seen that in my own life. What I have seen is my wife taking monstrously expensive drugs to keep her cancer from coming back. If we were poor and had to pay for them ourselves, it would be really tempting to cross our fingers and hope.

And finally, both sides talk about cutting costs by transferring those costs to somebody else. For liberals, “somebody else” is usually the government, or (passing the buck one step further) the taxpayer. For conservatives, it’s the individual — especially if he or she is unhealthy. Capping what the government is willing to put into Medicare or Medicaid, for example, may help the government control its budget deficit, but it doesn’t do anything to lower the need for treatment or the cost of providing it.

Similarly, letting individuals design their own (cheaper) health insurance — letting people opt out of insurance for care they won’t need, like prenatal care for men or geriatric care for young people — may lower some people’s individual expenses, but the total number of pregnancies and old people hasn’t changed. The cost of caring for them hasn’t gone away, it has just shifted to somebody else.

II. Christianity and abortion.

What’s misunderstand about it: The belief that a newly fertilized ovum has the full moral worth of a baby (or an adult) is often described as the “Christian” or even “Biblical” position.

What more people should know: The Bible says nothing about conception, and what it does say about fetuses and souls points in a different direction. The current ensoulment-at-conception dogma didn’t solidify among conservative Protestants until well after Roe v Wade.

*

Religiously, the question of whether abortion is murder comes down to when the fetus acquires a soul. Souls, after all, are the difference between murder and what butchers have done for millenia. (If you believe a chicken has an immortal soul, you really should be a vegetarian.) Anti-abortion arguments often (and usually inaccurately) point to the number of weeks before a fetus has a heartbeat or can feel pain, but such physical traits are just placeholders for a metaphysical trait that can’t be recognized in a secular setting like a legislature or a courtroom: the presence of a soul.

Unfortunately, microscopes and ultrasound machines didn’t exist when the Bible was being written, so scripture never mentions the miraculous moment when a sperm enters an ovum, nor gives a detailed description of fetal development. The observable sequence at the time was: sex, the woman shows signs of pregnancy, the fetus begins to move on its own, and birth. No one knew how to break the process down much finer than that, and apparently God never whispered His superior knowledge into anybody’s ear.

But anti-abortion Christians really, really want Biblical support for their position, so they thrust an enormous amount of interpretation onto a handful of texts that are either vague or really about something else. For example, Jeremiah 1:5, which you will occasionally see on billboards: “Before I formed you in the womb I knew you.” That might be a lyrical way of saying that God had been planning Jeremiah’s mission for a long time, or it might more literally say that Jeremiah’s soul existed before his conception, but it actually doesn’t say anything about precisely when that soul entered the body that was forming in his mother’s womb.

Which is not to say that the Bible is silent about souls entering bodies. There is a text — I believe it’s the only one — that quite explicitly describes a soul entering a body. But it doesn’t say what anti-abortion folks want to believe, so it seldom gets mentioned in abortion arguments. I’m talking about Genesis 2:7, which describes the creation of Adam.

And the Lord God formed man of the dust of the ground, and breathed into his nostrils the breath of life; and man became a living soul.

In other words: God formed Adam’s body completely, and then his soul entered that body with the breath. The obvious implication is that a fetus is soulless until it breathes. The Christian Left blog does a more detailed discussion of how this view aligns with other places where the Bible mentions pregnancy and miscarriage.

From the early Christian era through the Middle Ages, many Christian thinkers identified the soul with motion, and so held that it entered the fetus at the quickening, which was variously identified at anywhere from 40 to 120 days.

The Catholic Church has been against abortion in any form at least since the 1600s, when it began hoping for Catholic families to outpopulate Protestant families. But Protestant opinion varied widely, even among theological conservatives, until after abortion became a unifying conservative political issue in the late 1970s: The theology appears to have followed the politics, rather than leading it. The history of this discussion has been completely written over in the ensuing years. Slacktivist characterizes this process with a line from George Orwell’s 1984: “We have always been at war with Eastasia.”

As for why this corruption of church history and biblical interpretation is necessary, I believe the root issue is female promiscuity. Pregnancy is a great blessing to families that are ready to raise children, but traditionally it has also been the ultimate comeuppance for unmarried women who think they can have sex without consequences. When abortion is freely available, pregnancy becomes a much less effective threat for keeping women in line. That’s what social conservatives are really worried about, and why they don’t see effective birth control as a solution to the abortion problem.

III. Sanctuary cities

What’s misunderstood about them: What they are. In no American city, whether it identifies as a “sanctuary city” or not, do local officials actively prevent federal immigration officials from detaining or deporting undocumented immigrants. The issue is entirely about the extent to which local officials help ICE.

What more people should understand: Federalism. Under the Constitution, state or local government officials can’t block federal agents from enforcing federal laws, but they don’t have to help.

*

The word sanctuary evokes the idea that once you get there, you’re safe. That’s certainly how it worked for Esmeralda in The Hunchback of Notre Dame.

No city in the United States is a sanctuary for undocumented immigrants in that sense. Federal agents of Immigration and Customs Enforcement (ICE) can go anywhere in the country and arrest anyone they believe has broken federal immigration laws. Local officials can’t stop them, any more than they could stop the FBI from arresting terrorists or the Secret Service from arresting counterfeiters. (Legally, churches aren’t sanctuaries either, even though many of them — including the one I belong to (that’s me in the back, under the chandelier) — are supporting a sanctuary movement. So far ICE hasn’t been willing to break down church doors to haul somebody away, but fear of public opinion is all that stops them.)

However, unlike in some other countries, American state and local governments are not divisions or departments of the national government. The system we know as federalism prevents the national government from simply issuing orders to state and local officials. In particular, cooperation between various levels of law enforcement is mostly voluntary. (This is not an entirely liberal or conservative thing; conservatives want local police not to cooperate with federal gun laws.)

Vox has a pretty clear video explaining the situation.

Whenever local police arrest somebody, fingerprints are taken and submitted to the FBI, which then shares them with ICE. If ICE recognizes those fingerprints as belonging to someone they want to deport, they can send the local police a request to hold the person for an additional 48 hours, which gives ICE time to send out its own agents to make an arrest. But local police don’t have to comply.

Depending on where you live, local police might respond on a case-by-case basis, or the local government might establish a policy. The extent to which that policy refuses cooperation is what defines a sanctuary city.

A separate issue is whether the national government can cut off funds to uncooperative cities. (Again, this is a not a strictly liberal/conservative issue. The Affordable Care Act said that states that didn’t expand Medicaid in the way the law described would lose all federal Medicaid money. But the Supreme Court ruled against that kind of strong-arming.) In January, Trump issued an executive order threatening to pull federal funding from sanctuary cities, but, a judge blocked the enforcement of this order, writing:

Federal funding that bears no meaningful relationship to immigration enforcement cannot be threatened merely because a jurisdiction chooses an immigration-enforcement strategy of which the president disapproves.

In May, the Trump administration appeared to back off. Attorney General Sessions issued a definition of sanctuary cities that applied to very few places, and the restricted funds were only law enforcement grants from the Departments of Justice or Homeland Security.

[BTW: If you show a Trump supporter the Vox video, they’ll likely respond with this video from 1791L. However, that video does not actually identify any mistakes in the Vox video.]

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Three Misunderstood Things

July 3, 2017 – 9:59 am

This week: the anti-gay baker, why the Senate can’t move on, and whether raising the minimum wage kills jobs.

I. The Masterpiece Cakeshop case (which the Supreme Court will hear in the fall).

What’s misunderstood about it: People think it has free-speech implications.

What more people should know: The baker objected to the whole idea of making a wedding cake for two men, and cut off the conversation before the design of the cake was ever discussed. That makes it a discrimination case, not a freedom-of-speech case.

*

Defenders of Masterpiece Cakeshop owner Jack Phillips frequently portray him as a martyr not just to so-called “traditional marriage”, but to the freedom of tradespeople not to say things they object to. For example, one conservative Christian tried to demonstrate a double standard like this:

Marjorie Silva, owner of Azucar Bakery in Denver, said she told the man, Bill Jack of the Denver suburb of Castle Rock, that she wouldn’t fill his order last March for two cakes in the shape of the Bible, to be decorated with phrases like “God hates gays” and an image of two men holding hands with an “X” on top.

Is this cake gay or straight?

But the Colorado Civil Rights Commission ruled against Jack, because the two cases are very different: Silva objected to the message Jack wanted on the cake, not to anything about Jack himself or the situation in which the cake would be served. If the government had demanded that Silva make that cake, it would have been an example of forced speech, which there is already a long legal history against.

Do conservatives also have a right to refuse forced speech? Yes. A Kentucky court recently ruled in favor of a print-shop that refused to make t-shirts for a gay-pride festival.

So liberals must have howled in rage, right? Not me, and not philosopher John Corvino, who defended the Kentucky decision on the liberal news site Slate:

the print shop owners are not merely being asked to provide something that they normally sell (T-shirts; cakes), but also to write a message that they reject. We should defend their right to refuse on free-speech grounds, even while we support anti-discrimination laws as applied to cases like Masterpiece Cakeshop. … Free speech includes the freedom to express wrong and even morally repugnant beliefs; it also includes the freedom for the rest of us not to assist with such expression.

The reason the baker has lost at every stage so far — the administrative court and state appeals court ruled against him, and the Colorado Supreme Court refused to hear his appeal, letting the lower court ruling stand — is that he wasn’t objecting to putting some particular message or symbol on the cake, like a marriage-equality slogan or a rainbow flag. For all he knew when he refused, the men might have wanted a cake identical to one he had already made for some opposite-sex couple. In short, he objected to them, not to the cake they wanted.

Corvino explains:

One might object that Masterpiece Cakeshop is similar: “Same-sex wedding cakes” are simply not something they sell. But wedding cakes are not differentiated that way; a “gay wedding cake” is not a thing. Same-sex wedding cakes are generally chosen from the same catalogs as “straight” wedding cakes, with the same options for designs, frosting, fillings and so forth. It might be different if Masterpiece had said “We won’t provide a cake with two brides or two grooms on top; we don’t sell those to anyone.” But what they said, in fact, was that they wouldn’t sell any cakes for same-sex weddings. That’s sexual orientation discrimination.

II. Mitch McConnell’s agenda.

What’s misunderstand about it: If the Senate is stuck on its ObamaCare replacement, why can’t it move on to the next items on the Republican agenda: tax reform and the budget?

What more people should know: McConnell is trying to exploit a loophole in Senate rules. As soon as a new budget resolution passes, his ability to pass both TrumpCare and tax reform goes away — unless he changes the proposals to get Democratic votes.

*

During the Obama years, we often heard that “it takes 60 votes to get anything done in the Senate”, as if filibusters that can only be broken with 60-vote cloture motions were in the Constitution somewhere, and the minority party had always filibustered everything. (That’s why even the weakest gun-control bills failed, despite 54-46 votes in their favor.) But the Senate recognized a long time ago that budgets have to get passed somehow, and so the Budget Control Act of 1974 established an arcane process called “reconciliation” that circumvents the filibuster in very limited circumstances.

That’s how the Senate’s 52 Republicans can hope to pass bills without talking to the Democrats at all. But there’s a problem: Reconciliation is a once-a-year silver bullet. Fox Business explains:

Reconciliation allows Congress to consider just three items per fiscal year, whether they pertain to one bill or multiple. Those items are spending, revenue and debt limit. Since the GOP also wants to pass its tax reform agenda using reconciliation, it cannot statutorily do that under this budget blueprint because the two policy measures overlap.

And NPR elaborates:

The budget resolution for the current fiscal year dictates that any reconciliation measure must reduce the deficit, which the GOP’s Obamacare repeal was designed to do. Republicans then could draft a new budget resolution for the upcoming fiscal year with easier deficit targets, allowing for more aggressive tax cuts.

Under the most commonly accepted interpretation of the reconciliation rules, as soon as Congress passes a budget resolution for Fiscal Year 2018 (which begins this October), the window for passing TrumpCare under the FY 2017 resolution closes. So the only way to get them both done before facing another election campaign is to do them in the right order: first TrumpCare, then a new budget resolution, then tax reform.

Otherwise, McConnell’s options become less appealing: He can get rid of the filibuster completely, which several Republican senators don’t support. He can scrap either TrumpCare or tax reform for the foreseeable future. Or he can start envisioning the kinds of proposals that might get eight Democratic votes, plus a few to make up for Republican defections.

III. The minimum wage.

What’s misunderstood about it: Both supporters and critics of an much-higher minimum wage think they know what effect it will have on jobs.

What more people should understand: The effect of a minimum-wage increase on jobs is an empirical issue, not something you can deduce from first principles. And the data we have only covers small increases.

*

There is a certain kind of conservative who thinks he learned everything he needs to know about this issue in Econ 101: Every commodity, including unskilled labor, has a demand curve; if you raise its price, demand for it falls.

The right response to that analysis is maybe. Imagine that you own a shop with one machine, run by your sole employee. The machine produces some high-profit item. To make things simple, let’s ignore counterfeiting laws and imagine that the machine prints money. Cheap paper and ink go in, $100 bills come out.

Obviously, you could afford to pay your employee a lot more than the $7.25-per-hour federal minimum wage. But you don’t, because the machine is simple to operate and you could easily replace him, so he doesn’t have any bargaining leverage.

Now what happens if the minimum wage goes up to $15? Do you fire your guy and shut the machine down? Do you abandon your plan to buy another machine and hire a second worker? No, of course not.

Admittedly, that’s an extreme example, but it points out the right issues: Whether an increase in the minimum wage causes you to employ fewer people depends on how much you’re making off those people’s work. If you have a razor-thin profit margin, maybe a higher wage makes the whole operation unprofitable and you lay workers off. But if you could actually afford the higher wage, and the only reason you don’t pay it already is that your workers lack bargaining leverage, then you don’t.

In fact, if a minimum-wage increase gives your customers more money to spend on whatever you make, then you might have to hire more people to meet the demand.

Which situation is more typical? One reason to think the second situation is, is that sometime in the 1970s wages stopped tracking productivity: Workers have been producing more, but not getting comparable pay raises, presumably because they lack the bargaining power to demand them.

During the same era, the minimum wage has not kept pace with inflation. An increase to around $11 would just get it back to where it was in 1968. If it wasn’t causing massive unemployment then, why would it now?

Supporters of a higher minimum wage also point to studies of past increases, which don’t show big job losses.

But there’s a problem on that side, too: Past hikes haven’t been nearly as big as the proposal to go from $7.25 to $15. I was a minimum-wage worker myself in the 1970s when it increased from $1.60 to $1.80. I suspect my employer was not greatly inconvenienced. But larger increases might have a shock value that makes an employer say, “We can’t afford all these workers.”

That’s why the new data coming in from Seattle is so important: Seattle was one of the first cities to adopt a much-higher minimum wage, so we’re just beginning to see the results of that. The headlines on that initial study were that the higher wage is costing jobs, but that early conclusion is still debatable.

So in spite of my own preference for a higher minimum wage, I find myself in agreement with minimum-wage skeptic economist Adam Ozimek: This is an empirical question, and both sides should maintain more humility until we see more definitive data.

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